Question

Brief Exercise 12-2 On January 1, 2018, Marshall Ltd. purchased $221,000 of 9 , 10-year bonds at face value (100) with the intention of selling the bonds early the next year. Interest is received semi-annually only 1 and January 1. At December 31, 2018, which is the company's fiscal year end, the bonds were trading in the market at 95 (this means 95% of maturity value) Using the fair value through profit or loss model, prepare the journal entry to record the purchase of the bonds on January 1. (Credit accounts are automatically indented when the amount is entered. Do not indent mandaly If no entry is required, select "No Entry for the account titles and enter for the amounts)

Answer 1

A B C 1 Date Credit ($) Particulars 1-Jan Bonds receivable Cash Debit ($) 221000 221000 1-Jul Cash 9945 Interest revenue 9945 nm two room 9945 31-Dec Interest receivable Interest revenue 9945 5967 31-Dec Loss on bonds Bonds receivable 5967

B C D A 1 Date Particulars 43831 Bonds receivable Credit ($) Debit ($) 221000 Cash =C2 mor 44013 Cash =221000*9%*6/12 Interest revenue =C5 =221000*9%*6/12 8 44196 Interest receivable Interest revenue =C8 =221000*9%*3/10 44196 Loss on bonds Bonds receivable 12 =C11 13