Question

Exercise 12-2 Jenek Corporation had the following transactions pertaining to debt investments. 1. Purchased 60 9%, $1,200 Leeds Co. bonds for $72,000 cash on January 1, 2017. Interest is payable annually on January 1. 2. Accrued interest on Leeds Co. bonds on December 31, 2017. 3. Received interest on Leeds Co. bonds on January 1, 2018. 4. Sold 36 Leeds Co. bonds for $47,520 on January 1, 2018. Journalize the transactions. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select "No entry" for the account titles and enter o for the amounts.) Date Account Titles and Explanation Debit Credit (To record interest received) (To record sale of bonds)

Answer 1

Date	Account Titles and Explanation	Debit	Credit
Jan 1, 2017	Debt investment	$72,000
	Cash		$72,000
Dec. 31, 2017	Interest receivable	$6,480
	Interest revenue		$6,480
Jan. 1, 2018	Cash	$6,480
	Interest receivable		$6,480
Jan. 1, 2018	Cash	$47,520
	Debt investment		$43,200
	Gain on sale of debt investment		$4,320

Interest receivable on December 31, 2017 = 72,000 x 9%

= $6,480

Cost of 36 bonds = 36 x 1200

= $43,200

Sale value of 36 bonds = $47,520

Gain on sale of bonds = Sale value of 36 bonds - Cost of 36 bonds

= 47,520-43,200

= $4,320

Kindly comment if you need further assistance.

Thanks‼!