JOURNAL ENTRIES
a) The Initial acquisition of the Jerris corp. bonds on October 1 20Y2.
Investment in Bonds (Debit) $221,200
Cash (Credit) $ 221,200
b) Adjusting entry for three months of accrued interest earned on December 31, 20Y2
Interest receivable (Debit). $ 3,318
Interest Revenue (Credit). $ 3,318
($ 221,200 x 6%x 3/12 = $ 3318)
c) The receipt of semi annual interest on April 01, 20Y3
Cash (Debit) ($221,200x6%x6/12) $ 6,636
Interest receivable (Credit) $ 3,318
Interest revenue ( Credit) $ 3,318
Note; If bond is purchased for premium, the difference between the bond face value and the purchase price shall be amortized over the life of the bond using straight-line method.
d) The sale of bond on April 01, 20Y3 for $101.
Cash (Debit) $ 87,668
Profit on sale of bond (Credit) $868
Investment in bond(Credit) $86800
(Par Value = 100, 868 bonds sold for 101
Calculation will be 868x100= 86800 & 868x1= 868)
Entries for Investments in Bonds, Interest, and Sale of Bonds Kalyagin Investments acquired $221,200 Jerris Corp.,...
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