2.) Kelvin Corp acquired $220,000 of Jamis Co., 7% bonds at their face value on

Question

2.) Kelvin Corp acquired $220,000 of Jamis Co., 7% bonds at their face value on 10/1/2016. The bonds pay interst on April 1 and October 1. On April 1, 2017. Kelvin sold $80,000 of the Jarris bonds at 103. Journalize the entries to record the following Dr. a) The initial acquisition of the Jarris bonds on October 1, 2016 b) The 12/31/2016 adjusting entry for 3 months interest earned on the bonds Dr. Cr. c) The receipt of semi-annual interest on April1, 2017 Dr. d) The sale of $80,000 of Jarris Co. bonds at 103 on April 1, 2017 Dr. Cr.

Explanation / Answer

Journal Entries (Amount in $)

S.No. Date Account Titles and explanation Debit Credit a) 10/01/2016 Investment in Bonds 220,000 Cash 220,000 b) 12/31/2016 Interest Receivable 3,850 Interest Revenue (220,000*7%*3/12) 3,850 c) 04/01/2017 Cash (220,000*7%*6/12) 7,700 Interest Receivable (for 3 months) 3,850 Interest Revenue (Bal.fig) 3,850 d) 04/01/2017 Cash (80,000*103/100) 82,400 Gain on sale of investment (bal.fig) 2,400 Investment in Bonds (face value) 80,000

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