On January 1, Jewel Company buys $200,000 of Marcelo Corp. 12%, 36-month notes. Interest is paid on the last day of each month. The notes are classified as available-for-sale securities. This is the company's first and only investment in available-for-sale securities. On December 31, the notes have a fair value of $204,000. The journal entry on January 1 to record the investment is:
A. Debit Debt Investments - HTM, $204,000; Credit Cash, $204,000.
B. Debit Debt Investments - HTM, $200,000; Credit Cash, $200,000.
C. Debit Debt Investments - Trading, $200,000; Credit Cash, $200,000.
D. Debit Debt Investments - AFS, $200,000; Credit Cash, $200,000.
E. Debit Debt Investments - AFS, $204,000; Credit Cash, $204,000.
Answer: D
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