Landmark Corp.buys $300,000 of Schroeter Company's 8%,5-year bonds,at par value on September 1.Interest payments are made semiannually.All of the following regarding accounting for these securities are true except:

A) The debt securities should be recorded at cost,$300,000.
B) The securities will have a maturity value of $300,000.
C) The semiannual interest payment amount is $12,000.
D) The semiannual interest payment amount is $24,000.
E) Interest Revenue should be credited when interest is earned.

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Pongbhop Jamornsrianan · Accepted Answer

Final Answer : D, Explanation :  The semiannual interest payment amount is actually $12,000, not $24,000. This is because the interest rate is 8% and the bond has a face value of $300,000, so the annual interest payment is $24,000. Half of that amount is paid semiannually, which is $12,000.

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