On January 1, Jewel Company buys $177,000 of Marcelo Corp. 8%, 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 $180,800. The journal entry to record the receipt of the monthly interest on January 31 is:
A. Debit Cash $1180; credit Debt Investments-AFS $1180.
B. Debit Cash $1180; credit Interest Revenue $1180.
C. Debit Cash $1180; credit Fair Value Adjustment-AFS (ST) $1180.
D. Debit Cash $14,160; credit Debt Investments-AFS $14,160.
E. Debit Cash $1180; credit Fair Value Adjustment-AFS (LT) $1180.
Answer: B
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