Question

Gonzalez Company acquired $186,600 of Walker Co., 8% bonds on May 1 at their face amount. Interest is paid semiannually on May 1 and November 1, On November 1, Gonzalez Company sold $42,600 of the bonds for 98. 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 Nov. 1

Answer 1

a.

Date	Account titles and explanation	Debit	Credit
May 1	Investment in bonds	186,600
	Cash		186,600

b.

Date	Account titles and explanation	Debit	Credit
Nov 1	Cash	7,464
	Interest revenue		7,464

c.

Date	Account titles and explanation	Debit	Credit
Nov 1	Cash	41,768
	Loss on sale of bonds	852
	Invest in bonds		42,600

d.

Date	Account titles and explanation	Debit	Credit
Dec. 31	Interest receivable	1,920
	Interest revenue		1,920

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