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Lovun Quinta Associates acquired 57,580,000 par value, 5% 20-year bonds on their cate of issue, January 1 of the current year

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Answer #1

Investment in bonds Dr. 7580000

To cash A/c 7580000

30 june Cash Dr. 303200

To interest 303200

7580000×8%×6/12=303200

31 dec cash Dr. 303200

To interest 303200

2nd yr Investment in bond Dr. 5070000

To investment 5070000

(Balance of investment)

Interest on investment in bond Dr

To investment

30 june Cash Dr

To interest

31 dec cash Dr

To interest

3rd yr same entry as interest received

Sale of bond

Cash Dr.

To investment in bond

To profit on sale of bonds

(If profit at the time of sale)

Cash Dr.

Loss on sale of bond Dr.

To investment in bonds

(If loss on sale of bonds)

Thanks .. I hope this will definitely help you coz picture are blurred .Try my best to sort it

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