Question

1. Entries for Investments in Bonds, Interest, and Sale of Bonds

   Kalyagin Investments acquired $226,400 Jerris Corp., 8% bonds at their face amount on October 1, 20Y2. The bonds pay interest on October 1 and April 1. On April 1, 20Y3, Kalyagin sold $112,400 of Jerris bonds at 101.

   Journalize the entries to record the following:

   Do not round interim calculations. Round final answers to nearest dollar. For a compound transaction, if an amount box does not require an entry, leave it blank.

   a. The initial acquisition of the Jerris Corp. bonds on October 1, 20Y2.

   20Y2 Oct. 1

   b. The adjusting entry for three months of accrued interest earned on the Jerris Corp. bonds on December 31, 20Y2.

   20Y2 Dec. 31

   c. The receipt of semiannual interest on April 1, 20Y3.

   20Y3 Apr. 1

   d. The sale of $112,400 of Jerris Corp. bonds on April 1, 20Y3, at 101.

   20Y3 Apr. 1

Answer 1

Answer,

--All the journal entries asked are provided below:

Date	Accounts title	Debit	Credit
Oct 1, 20Y2	Investment in Bonds	$              226,400
	Cash		$             226,400
	(Amount invested in Bonds)
Dec 31, 20Y2	Interest receivable	$                   4,528
	Interest Revenue (226400 x 8% x 3/12)		$                 4,528
	(3 month interest accrued)
April 1, 20Y3	Cash	$                   9,056
	Interest Revenue (226400 x 8% x 3/12)		$                 4,528
	Interest receivables		$                 4,528
	(Interest received)
April 1, 20Y3	Cash [112400 x 101/100]	$              113,524
	Gain on Sale of Bonds		$                 1,124
	Investment in Bonds		$             112,400
	(Investment sold)