Question

Entries for Investment in Bonds, Interest, and Sale of Bonds Gonzalez Company acquired $162,600 of Walker Co., 4% bonds on May 1 at their face amount. Interest is paid semiannually on May 1 and November 1. On November 1, Gonzalez Company sold $51,600 of the bonds for 95. Journalize entries to record the following in Year 1: For a compound transaction, if an amount box does not require an entry, leave it blank. a. The initial acquisition of the bonds on May 1. May 1 b. The semiannual interest received on November 1 Nov. 1 C. The sale of the bonds on November 1 NOW d. The accrual of $740 Interest on December 31

Answer 1

A в C D Credit Date May. 1 Debit $162.600 General Journal Investments-Walker Co. Bonds Cash (To record bonds acquired) $162,600 b. Credit Debit $3,252 Date General Journal Nov. 1 Cash Interest revenue (To record interest received) $3,252 Credit 14 15 Date General Journal Nov. 1 Cash Loss on sale of investments Investments-Walker Co. Bonds (To record sale of bonds) Debit $49,020 $2,580 $51,600 Credit Debit $740 22 Date General Journal Dec. 31 Interest receivable Interest revenue (To record accrued interest revenue) $740

Calculations are shown below: Α D Credit 1 a. Date General Journal 3 May. 1 Investments-Walker Co. Bonds Cash (To record bonds acquired) Debit 162600 Credit 8 9 b. Date General Journal Nov. 1 Cash Interest revenue (To record interest received) Debit =C3*4%*(6/12) Credit 13 c. 14 Date General Journal 15 Nov. 1 Cash Loss on sale of investments Investments-Walker Co. Bonds (To record sale of bonds) Debit =D17*95% =D17-C15 51600 d. Credit Debit =(C3-D17)*4%*(2/12) Date General Journal 22 Dec. 31 Interest receivable Interest revenue (To record accrued interest revenue) =C22