Question

Suppose Andersen Brothers purchases $400,000 of 5% annual bonds of Whitmore Corporation at face value on January 1, 2018. These bonds pay interest on June 30 and December 31 each year. They mature on December 31, 2027. Anderson intends to hold the Whitmore bond investment until maturity. Read the requirements. Requirement 1. Journalize Andersen Brothers's transactions related to the bonds for 2018. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.) Begin by journalizing Andersen Brothers' investment on January 1, 2018. Date Accounts and Explanation Debit Credit Requirements 2018 Jan. 1 1. Journalize Andersen Brothers's transactions related to the bonds for 2018. 2. Journalize the entry required on the Whitmore bonds maturity date. (Assume the last interest payment has already been recorded.) Print Done

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Answer 1

Credit Date Accounts and Explanation Jan. 01, 2018 Long-term Investments-Held-to-Maturity Debit 400,000 $ Cash $ 400,000 $ 10,000 $ 10,000 $ 10,000 Purchased investment in bonds June 30, 2018 Cash ($400,000 * 5% * 6/12) Interest Revenue Received cash interest Dec. 31, 2018 Cash ($400,000 * 5% * 6/12) Interest Revenue Received cash interest Dec. 31, 2027 Cash Long-term Investments-Held-to-Maturity Disposed of bonds at maturity $ 10,000 $ 400,000 $ 400,000