Kalyagin Investments acquired $256,800 of Jerris Corp., 9% bonds at their face a

Question

Kalyagin Investments acquired $256,800 of Jerris Corp., 9% bonds at their face amount on October 1, 2016. The bonds pay interest on October 1 and April 1. On April 1, 2017, Kalyagin sold $72,000 of Jerris Corp. bonds at 103.

Journalize the entries to record the following (refer to the Chart of Accounts for exact wording of account titles and be sure to enter the year as part of the date):

Chart of Accounts

Journal

Journalize the entries to record the transactions. Refer to the Chart of Accounts for exact wording of account titles. Be sure to enter the year as part of the date.

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JOURNAL

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2016 Oct. 1 Initial acquisition of the Jerris Corp. bonds Dec. 31 Adjusting entry for three months of accrued interest earned on the Jerris Corp. bonds 2017 Apr. 1 Receipt of semiannual interest 1 Sale of $72,000 of Jerris Corp. bonds, at 103

Explanation / Answer

Journal entry :

Date accounts & explanation debit Credit 2016, Oct 1 Investments-Jerris Corp. Bonds 256800 Cash 256800 (To record investment in bonds) 2016, Dec 31 Interest receivable 5778 Interest revenue (256800*9%*3/12) 5778 (To record adjusting entry) 2017, Apr 1 Cash (5778*2) 11556 Interest receivable 5778 Interest revenue 5778 (To record receipt interest) Apr 1 Cash (72000*1.03) 74160   Gain on Sale of Investments 2160 Investments-Jerris Corp. Bonds 72000 (To record sale of bonds investment)

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