Penn Farms is a grower of hybrid seed corn for Bend Genetics Corporation. It has
ID: 2478113 • Letter: P
Question
Penn Farms is a grower of hybrid seed corn for Bend Genetics Corporation. It has had two exceptionally good years and has elected to invest its excess funds in bonds. The following selected transactions relate to bonds acquired as an investment by Penn Farms, whose fiscal year ends on December 31. 2017 Jan. 1 Purchased at par $840,000 of Dover Corporation 10-year, 9% bonds dated January 1, 2017, directly from the issuing corporation. July 1 Received the semiannual interest on the Dover bonds. Dec. 31 Accrual of interest at year-end on the Dover bonds. Assume that all intervening transactions and adjustments have been properly recorded and the number of bonds owned has not changed from December 31, 2017, to December 31, 2019. 2020 Jan. 1 Received the semiannual interest on the Dover bonds. Jan. 1 Sold $420,000 of Dover bonds at 107. July 1 Received the semiannual interest on the Dover bonds. Dec. 31 Accrual of interest at year-end on the Dover bonds. Journalize the listed transactions for the years 2017 and 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.) 2017 Date Account Titles and Explanation Debit Credit 2020 Date Account Titles and Explanation Debit Credit (To record interest received) (To record sale of bonds)
Explanation / Answer
Solution.
Date Account Titles & Explanation Debit $ Credit $ 1 Jan 2017 Investment in Bonds of Dover Corporation 840000 Cash 840000 (Bonds purchased as investments in Dover Corporation) 1 July 2017 Cash 37800 Interest Income 37800 (Semiannual Interest received on bonds) 31 Dec 2017 Interest Receivable 37800 Interest Income 37800 (Semiannual Interest due on bonds) 1 Jan 2020 Cash 37800 Interest Receivable 37800 (Semiannual interest received) 1 Jan 2020 Cash 449400 Investment in Bonds of Dover Corporation 420000 Profit on Sale on Investments 29400 (Bonds held as investments sold at Profit) 1 July 2020 Cash 18900 Interest Income 18900 Semiannual Interest received on bonds) 31 Dec 2020 Interest Receivable 18900 Interest Income 18900 (Semiannual Interest due on bonds)Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.