Question

The City of Valley Ridge Scholarship Fund purchased bonds on May 1. The bond price was $600,000 and the bonds earn 5% annual interest, payable semiannually on March 1 and September 1. The journal entry to record the purchase would include a credit to cash for ______.

-$600,000
-$630,000
-$610,000
-$605,000

Answer 1

To record the purchase of bonds by the City of Valley Ridge Scholarship Fund, a journal entry would include a credit to cash for $600,000, the price paid for the bonds which earn 5% annual interest paid semiannually.

Step-by-step explanation:

The City of Valley Ridge Scholarship Fund purchased bonds at a price of $600,000, and these bonds earn 5% annual interest, payable semiannually. When recording the journal entry for the purchase of these bonds, a credit to cash would be made for the amount paid to acquire the bonds. Considering the bond price provided, which is $600,000, no additional interest or fees have been mentioned that would alter this amount; thus, the credit to cash will be for $600,000.