Homework Answers
Answer -
Step - (1) - Information Given -
Alan Company purchased $400000 of ABC Co. 5% bonds at 100 plus accrued interest of $4500. Alan later sold $250000 of the bonds at 97. The journal entry for the purchase would include a -
- Option - (a) - debit to Interest Revenue for $4500.
- Option - (b) - debit to Interest Receivable for $4500.
- Option - (c) - credit to Interest Revenue for $4500.
- Option - (d) - credit to Interest Receivable for $4500.
.
Step - (2) - Analysis -
In the given case, the Journal entry for purchase of bonds would be -
| Particulars | Debit ($) | Credit ($) |
|
Investment in Bonds Interest Receivable Cash |
400000 4500 - |
- - 404500 |
.
Step - (3) - Conclusion -
Therefore, Option - (b) - debit to Interest Receivable for $4500, is Correct.
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The following information relates to the debt securities investments of Sheffield Company. 1. On February 1, the company purchased 11% bonds of Gibbons Co. having a par value of $318,000 at 100 plus accrued interest. Interest is payable April 1 and October 1. 2. On April 1, semiannual interest is received. 3. On July 1, 9% bonds of Sampson, Inc. were purchased. These bonds with a par value of $219,600 were purchased at 100 plus accrued interest. Interest dates are...
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27. On January 1, 2019, Parsons Company purchased $84,000, 10 year, 7% government bonds at 100. The semi-annual interest payment dates are June 30 and December 31. Required: (Shows computations and references are required) (1) Journalize the entry to record the bond purchase. (2) Journalize the receipt of interest at June 30 and December 31, 2019. Journalize the February 1, 2020 sale of the bonds for $82,000 plus accrued interest for one month. (3) Debit Credit
Problem 17-2 On January 1, 2017, Crane Company purchased $310,000, 6% bonds of Aguirre Co. for $284,855. The bonds were purchased to yield 8% interest. Interest is payable semiannually on July 1 and January 1. The bonds mature on January 1, 2022. Crane Company uses the effective-interest method to amortize discount or premium. On January 1, 2019, Crane Company sold the bonds for $286,344 after receiving interest to meet its liquidity needs. Prepare the journal entry to record the purchase...
On January 1, 2020, Wildhorse Company purchased $300,000, 6% bonds of Aguirre Co. for $275,666. The bonds were purchased to yield 8% interest. Interest is payable semiannually on July 1 and January effective-interest method to amortize discount or premium. On January 1, 2022, Wild horse Company sold the bonds for $277,397 after receiving interest to meet its liquidity needs. The bonds mature on January 1, 2025. Wildhorse Company uses the Prepare the journal entry to record the purchase of bonds...
EX 15-3 Entries for investment in bonds, interest, and sale of bonds OBJ.2 purchased $120,000 of 6%, 20-year Sanz County bonds on May 11, Year 1, directly from the county, at their face amount plus accrued interest. The bonds pay semiannual interest on April 1 and October 1. On October 31, Year 1, Bocelli Co. sold $30,000 of the Sanz County bonds at 99 plus $150 accrued interest less a $100 brokerage commission. Provide journal entries for the following: a....
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