Homework Answers
Solution: Journal Entries
| Date | Account Titles and Explanation | Debit | Credit |
| Feb. 1 | Cash | $ 12,500 | |
| Bonds | $ 12,300 | ||
| Gain on sale of bonds | $ 200 | ||
| (Being bond issued at premium ) | |||
| Feb. 1 | Unrealized Gain | $ 300 | |
| Income Summary | $ 300 | ||
| ( Being unrealized gain transferred) |
Notes:
1) Unrealized gain will be transferred to income statement at the time of sale. $300 ($12,300 - $12,000) of such gain recognized on December last year
2) It is assumed that interest receivable for January month is included while calculation the selling price of bonds and no need to consider again.
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