EX 15-4 Entries for investment in bonds, interest, and sale of bonds The followi

Question

EX 15-4 Entries for investment in bonds, interest, and sale of bonds The following bond investment transactions were completed Company during 2014 by Tig ond investment transicions were completed during lus 30 days' accrued accrued interes Jan. 31. Purchased 75, $1,000 government bonds at 100 plus 30 days The bonds pay 6% annual interest on July 1 and January 1. July 1. Received semiannual interest on bond investment. Aug. 29. Sold 35, $1,000 bonds at 98 plus $350 accrued interest. a. Journalize the entries for these transactions b. Provide the December 31, 2014, adjusting journal entry for semiannual interess on the bonds.

Explanation / Answer

Bonds Purchased 1000*100 100000 Accrued Interest 100000*6%*30/365 493 Jan-31 Investment in Bonds 100000 Accrued Interest 493 To Cash 100493 Jul-01 Cash Dr 3000    To Interest 2507 To Interest Accrued 493

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