On January 1, 2017, Brooklyn Company Purchases $80,000, 7% Bonds

Multiple Choice

On January 1, 2017, Brooklyn Company purchases $80,000, 7% bonds at a price of 94 and a maturity date of January 1, 2027. Brooklyn Company intends to hold the bonds until maturity. Interest is paid semiannually, on January 1 and July 1. Brooklyn Company has a calendar year and uses the straight-line amortization method for discounts and premiums. The adjusting entry to amortize the bond investment on December 31, 2017 is:

A) debit Interest Receivable $2800 and credit Interest Revenue $2800.
B) debit Interest Receivable $5600 and credit Interest Revenue $5600.
C) debit Held-to-Maturity Investment in Bonds $240 and credit Interest Revenue $240.
D) debit Held-to-Maturity Investment in Bonds $480 and credit Interest Revenue $480.