Question

Please help me finish!

Astro Mile & Co. owns vast amounts of corporate bonds. Suppose Astro Mile buys $500,000 of BitterCo bonds at face value on January 2, 2018. The BitterCo bonds pay interest at the annual rate of 7% on June 30 and December 31 and mature on December 31, 2022. Astro Mile intends to hold the investment until maturity. Requirements 1. Journalize any required 2018 entries for the bond investment. 2. How much cash interest will Astro Mile receive each year from BitterCo? 3. How much interest revenue will Astro Mile report during 2018 on this bond investment? Requirement 1. Journalize any required 2018 entries for the bond investment. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.) Begin by journalizing Astro Mile's investment on January 2, 2018. Date Accounts and Explanation Debit Credit 2018 Jan. 2 Held-to-Maturity Debt Investments 500,000 Cash 500,000 Question Viewer Purchased investment in bonds. | Debit Credit Next, journalize the receipt of cash interest on June 30, 2018. Date Accounts and Explanation 2018 Jun. 30 Cash Interest Revenue Received cash interest.

Answer 1

--Requirement 1:
>Remaining journal entries

Date	Accounts title	Debit	Credit
30-Jun	Cash	$17,500
	Interest Revenue ($500000 x 7% x 6m/12m)		$17,500
	(to record receipt of intetesT)
31-Dec	Cash	$17,500
	Interest Revenue ($500000 x 7% x 6m/12m)		$17,500
	(to record receipt of intetesT)

>[2] Cash interest received each year = $ 500000 x 7% = $ 35000

>[3] Interest revenue for 2018 = $ 35,000