Homework Answers
Answer -
| Date | Account | Debit | Credit |
| May 1, 2016 | Investment - Elkin City bonds | $84000 | |
| Interest receivable | $560 | ||
| Cash ($84000 + $560) | $84560 | ||
| Jun. 16, 2016 | Investment - Morgan Co. bonds | $134000 | |
| Interest receivable | $335 | ||
| Cash ($134000 + $335) | $134335 | ||
| Sep. 1, 2016 | Cash | $1680 | |
| Interest receivable | $560 | ||
| Interest revenue ($1680 - $560) | $1120 | ||
| Oct. 1, 2016 | Cash | $34720 | |
| Interest revenue | $112 | ||
| Gain on sale of investment | $1008 | ||
| Investment - Elkin City bonds | $33600 | ||
| Dec. 1, 2016 | Cash | $4020 | |
| Interest receivable | $335 | ||
| Interest revenue ($4020 - $335) | $3685 | ||
| Dec. 31, 2016 | Interest receivable | $672 | |
| Interest revenue | $672 | ||
| Dec. 31, 2016 | Interest receivable | $670 | |
| Interest revenue | $670 | ||
| Mar. 1, 2017 | Cash | $1008 | |
| Interest receivable | $672 | ||
| Interest revenue ($1008 - $672) | $336 | ||
| Jun. 1, 2017 | Cash | $4020 | |
| Interest receivable | $670 | ||
| Interest revenue ($4020 - $670) | $3350 |
Calculation:
1. Sep. 1, 2016:
Cash = $84000 * 4% * (6/12 months) = $1680
2. Oct. 1, 2016:
Gain on sale of investment = [$33600 * 1.03] - $33600 = $1008
Cash = $112 + $1008 + $33600 = $34720
3. Dec. 1, 2016:
Cash = $134000 * 6% * (6/12 months) = $4020
4. Mar. 1, 2017:
Cash = ($84000 - $33600) * 4% * (6/12 months) = $1008
5. Jun. 1, 2017:
Cash = $134000 * 6% * (6/12 months) = $4020
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