Question

Brief Exercise 17-1 Monty Company purchased, on January 1, 2017, as a held-to-maturity investment, $85,000 of the 10%, 5- year bonds of Chester Corporation for $78,873, which provides an 12% return. Prepare Montys journal entries for (a) the purchase of the investment, and (b) the receipt of annual interest and discount amortization. Assume effective-interest amortization is used. (Round answers to 0 decimal places, e.g. 1,225. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select No Entry for the account titles and enter O for the amounts.) Cedi Click if you would like to Show Work for this question: Smen Shew Work LEST OP ACCOUNTS Question Attempts: e of S used 龇ve tarte
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Answer #1
(a) Held to Maturity Securities A/c Dr $78,873
To Cash $78,873
(b) Cash A/c Dr $8,500 ($85,000*10%)
Held to Maturity Securities A/c Dr $965
To Interest Revenue $9,465 ($78,873*12%)
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