Question

On January 1, 2X13, Soothing Massage Company acquired, as a long-term investment, 20 bonds with a...

On January 1, 2X13, Soothing Massage Company acquired, as a long-term investment, 20 bonds with a face value of $1,000 each. The bonds have a 10-year life, a 10% coupon rate, and pay interest semi-annually every June 30 and December 31. What is the journal entry to be made by Soothing Massage Company on January 1, 2X13, if the bonds were purchased at a price to yield 12%?

A) Investment in Bonds          9,543.40

        Cash                                                              9,543.40

B) Investment in Bonds       11,037.28

        Cash                                                            11,037.28

C) Investment in Bonds       17,705.90

        Cash                                                             17,705.90

D) Investment in Bonds       20,000.00

        Cash                                                           20,000.00

E) Investment in Bonds         22,492.64

        Cash                                                            22,492.64

Note: Please show the math to the answer.

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