On August 1, 2020, Franklin Inc

On August 1, 2020, Franklin Inc. acquired $ 120,000 (face value) 10% bonds of Machu Corporation at 102 plus accrued interest. The bonds were dated May 1, 2020, and mature on April 30, 2023, with interest payable each October 31 and April 30. The bonds will be held to maturity. Assuming the amortized cost model is used, the entry to record the purchase of the bonds on August 1, 2020 is a) Bond Investment at Amortized Cost................................125,400
Cash ................................................................125,400

b)Bond Investment at Amortized Cost........................122,400
Interest Income...............................3,000
Cash.....................................................125,400

c) Bond Investment at Amortized Cost........................125,400
Interest Income...............................3,000
Cash.....................................................122,400

d) Bond Investment at Amortized Cost.................. 120,000
Premium on Bonds................................................5,400
Cash............................................................................125,400

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