Question

Leonard Technologies invests $62,000 to acquire $62,000 face value, 10%, five-year corporate bonds on December 31, 2014. The bonds will mature on December 31, 2019. The bonds pay interest semiannually on December 31 and June 30 every year until maturity. Assume Leonard Technologies uses a calendar year. Based on the information provided, which of the following will be included in the journal entry for the transaction on December 31, 2018? O A. a credit to Interest Revenue for $6,200 OB. a debit to Interest Revenue for $6,200 OC. a debit to Interest Revenue for $3,100 OD. a credit to Interest Revenue for $3,100

Answer 1

Journal Entries Date Account Title and Explaination Debit Credit Post. Ref. Dec.31 3,100.00 3,100.00 Cash ($62000x10%x6/12) Interest Revenue (To record interest revenue for the semi annual period ended december 31, 2018) So, Option D is Correct Answer

Answer to Question 2: Principal amount Rate of Interest $97,000.00 15% Interest Expense @15% (b) Period Installment (a) Principal Reduction (a)-(b) Balance Principal $ 97,000.00 $ 11,081.00 $ 85.919.00 $ 12,743.15 $ 73,175.85 $ 14,654.62 $ 58,521.23 $ $ 25,631.00 $ 25,631.00 $ 25,631.00 $ 14,550.00 12,887.85 10,976.38 The portion of interest Expense paid on the third installment is $10,976. So, Option D is Correct Answer. Answer to Question 3: Dividend to be paid on Preferred Stock = $81 x 14000 shares x 10% = $113,400.00 Dividends to be paid on Common Stock = Total Dividend Declared - Preferred Dividend = $185,000 - $113,400 = $71,600.00 So, Option A is Correct Answer.