Matsuko Company issued $100 million of fixed interest rate 10-year bonds payable

ID: 2636213 • Letter: M

Question

Matsuko Company issued $100 million of fixed interest rate 10-year bonds payable at 98 (98%) during the year. At year-end, the bonds were selling in the bond market at 98. What entry would Matsuko make at year-end to record the change in selling price?

A) Debit Bonds Payable $2 million; credit Interest Expense $2 million.

B) Debit Interest Expense $2 million; credit Bonds Payable $2 million.

C) Debit Investment in Bonds $2 million; credit Investment Revenue $2 million.

D) No entry needed.

E) None of the above is correct.