Question

On January 1, 2019, a company's balance sheet reports its investments in debt securities as follows: Assets Investment in HTM securities: $207,544

Supporting information: The HTM securities are $200,000 face value securities purchased on January 1, 2017, at a yield of 4%. The securities have a 4-year total life and pay interest annually on December 31, at a coupon rate of 6%.

Required:

Investment in HTM securities reported on the December 31, 2019 balance sheet is:
a. $203,846
b. $204,938
c. $207,544
d. $207,997

Answer 1

correct option is a. $203,846

Step-by-step explanation:

given data

Assets Investment = $207,544

face value = $200,000

yield = 4%

coupon rate = 6%

to find out

Investment in HTM security report on balance sheet

solution

we get here balance that is express as

balance = Assets Investment + Interest @4 - Interest Paid .................1

balance = $207,544 + ( $207544 × 4% ) - ( $200000 × 6% )

balance = $207,544 + $8,302 - $12,000

balance = $203,846

so correct option is a. $203,846