Question

Suppose Sam and Sons purchases $700,000 of 7% annual bonds of Bridge 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, 2021. Sam intends to hold the Bridge bond investment until maturity. Read the requirements. Requirement 1. Journalize Sam and Sons'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 Sam and Sons' investment on January 1, 2018. Date Accounts and Explanation Debit Credit 2018 1 Requirements Jan. 1 1. 2. Journalize Sam and Sons's transactions related to the bonds for 2018. Journalize the entry required on the Bridge bonds maturity date. (Assume the last interest payment has already been recorded.) Print Done

Answer 1

DATE OF ISSUE	01-01-2018
PURCHASE PRICE = FACE VALUE	$700,000
INTERST RATE	7%
INTEREST PAYMENT DATES	30TH JUNE, 31 DECEMBER
MATURITY DATE	31-12-2021

DATE	PARTICULARS	DEBIT	CREDIT
01-01-2018	INVESTMENTS IN 7% BOND	$700,000
	CASH		$700,000
	BEING INVESTMENTS PURCHASED
30-06-2018	CASH	$24,500
	INTEREST ON INVESTMNENT		$24,500
	BEING INTERET RECEVIED ON INVESTMENT
31-12-2018	CASH	$24,500
	INTEREST ON INVESTMNENT		$24,500
	BEING INTERET RECEVIED ON INVESTMENT
31-12-2021	CASH	$700,000
	INVESTMENTS IN 7% BOND		$700,000
	BEING AMOUNT RECEIEVED ON MATURITY

Interest amount = $700,000*7%*1/2 =$24, 500