Question

Butler purchased a bond on January 1, 2018, for $150,000. The bond has a face value of $150,000 and matures in 10 years. The bond pays interest on June 30 and December 31 at a 2% annual rate. Butler plans on holding the investment until maturity. Read the requirements. Requirement 1. Journalize the 2018 transactions related to Butler's bond investment. Explanations are not required. (Record debits first, then credits. Exclude explanations from journal entries.) Begin by journalizing Butler's investment on January 1, 2018. Date Accounts Debit Credit Jan. 1 0 Requirements 1. Journalize the 2018 transactions related to Butler's bond investment. Explanations are not required. 2. Journalize the transaction related to Butler's disposition of the bond at maturity on December 31, 2027. (Assume the last interest payment has already been recorded.) Explanations are not required. Print Done

Answer 1

Butler

Date	Account Titles	Debit	Credit
Jan-01	Investment in Bonds	$              150,000
2018	Cash		$              150,000
Dec-31	Cash	$              150,000
2027	Investment in Bonds		$              150,000

Brookhaven

1.

Date	Account Titles	Debit	Credit
Jan-02	Investment in Bonds	$          1,300,000
2018	Cash		$          1,300,000

2.Cash Interest received = $1300000 x 7% = $91000

3. Interest Revenue to be recognized in 2018 = $1300000 x 7% = $91000

Brookhaven and Co.

1. Long term Investment / Non Current Investment

2.

Date	Account Titles	Debit	Credit
Dec-31	Cash	$                30,000
2032	Interest Revenue		$                30,000
Dec-31	Cash	$          1,000,000
2032	Investment in Bonds		$          1,000,000