Albright Company purchased as a long-term investment $500,000 of Benton Corporat

Question

Albright Company purchased as a long-term investment $500,000 of Benton Corporation 10-year, 9% bonds.

Sold half the bonds at 98 plus accrued interest of $3,750. The broker deducted $200 for brokerage fees and taxes, remitting the balance.

Required: Present entries to record the following selected transactions: Refer to the Chart of Accounts for exact wording of account titles. March 1 Purchased bonds at their face amount for $500,000. May 1

Sold half the bonds at 98 plus accrued interest of $3,750. The broker deducted $200 for brokerage fees and taxes, remitting the balance.

Explanation / Answer

CASH A/C.........................................................DR $28250

BROKERAGE FEES & EXPENSES A/C...............DR $200

LOSS ON SALE OF INVESTMENTA/C...............DR $300

     TO LONG TERM INVESTMENT                                         $25000

     TO ACCURED INTEREST INCOME        $3750                         

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