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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







-Bond Investment at Amortized Cost 120,000 Premium on Bonds 5,400     
Cash 1 25,400
(b) Bond Investment at Amortized Cost 122,400
Interest Receivable 3,000     
Cash 125,400




(c) Bond Investment at Amortized Cost. 125,400     
Cash 125,400


(d) Bond Investment at Amortized Cost. 125,400     
Interest Revenue 3,000    
 Cash 122,400




Which option is it??

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