On August 1, 2010, Fowler Company acquired $200,000 face value 10% bonds of Kasnic Corporation at 104 plus accrued interest. The bonds were dated May 1, 2010, and mature on April 30, 2015, with interest payable each October 31 and April 30. The bonds will be held to maturity. What entry should Fowler make to record the purchase of the bonds on August 1, 2010?
a. Held-to-Maturity Securities 208,000
Interest Revenue 5,000
Cash 213,000
b. Held-to-Maturity Securities 213,000
Cash 213,000
c. Held-to-Maturity Securities 213,000
Interest Revenue 5,000
Cash 208,000
d. Held-to-Maturity Securities 200,000
Premium on Bonds 13,000
Cash 213,000
Answer: A