Brief Exercise 17-3 Wildhorse Corporation purchased, as a held-to-maturity inves

Question

Brief Exercise 17-3 Wildhorse Corporation purchased, as a held-to-maturity investment, $70,000 of the 796, 6-year bonds of Harrison, Inc. for $77,181, which provides a 5% return. The bonds pay interest semiannually. Prepare Wildhorse's journal entries for (a) the purchase of the investment, and (b) the receipt of semiannual interest and premium amortization. Assume effective-interest amortization is used. (Round answers to o decimal places, e.g. 5,125. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Na. Accoant Titks and Esplanation b) Click if you would liske to Show Work for this question Oren Show Wer

Explanation / Answer

Journal entry :

No. Account title and explanation debit credit a) Bond investment a/c 77181 Cash a/c 77181 (To record purchase of held to maturity investment) b) Cash a/c (70000*.07*6/12) 2450 Bond investment a/c 520 Interest revenue a/c (77181*5%*6/12) 1930 (To record interest revenue)

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