Jenek Corporation had the following transactions pertaining to debt investments.

Question

Jenek Corporation had the following transactions pertaining to debt investments.

Jan. 1 Purchased 40 8%, $1,400 Leeds Co. bonds for $56,000 cash. Interest is payable semiannually on July 1 and January 1. July 1 Received semiannual interest on Leeds Co. bonds. July 1 Sold 24 Leeds Co. bonds for $38,080. Journalize the transactions. (Round answers to O decimal places, e. g. 5,275. Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)

Explanation / Answer

Date Particulars Debit Credit

Jan.1 Debt Investment $56,000

Interest Revenue 0.00

July.1 Cash 2240

Interest Revenue (See note1) 2240

  

July.1 Cash 38080

Debt investment 33600

Gain on sale of Debt invetment (Note2) 4480

Note:1 Interest revenue =56000*8/100*6/12= 2240

Note:2 Gain = 38080- 24*$1400

=$4480

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