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

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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