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15 August, 10:19

Marian Company's records show the following account balances at 2/1/18: Investment in HTM securities, $500,000; and discount on HTM investment, $20,000. On that day, the company sells the investment for $520,000. The journal entry would included debits of

a-$20,000 to loss

b-$20,000 to gain

c-$20,000 to discounts

d-$520,000 to cash

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  1. 15 August, 13:05
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    c-$20,000 to discounts

    d-$520,000 to cash

    Explanation:

    At 2/1/18 the balance of investment account is debt $500,000 and discount account is credit $20,000. On sale of Investment $520,000 the cash and discount account will be debited. Journal Entry Should be as follow:

    Account DR. Cr.

    Discount $20,000

    Cash $520,000

    Securities Investment $500,000

    Gain on sale $40,000
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