Answer:
The Journal entries are as follows:
(i) On may 1,
Investment - Walker Co. A/c Dr. $153,600
To cash $153,600
(To record the initial acquisition of the bonds)
(ii) On November 1,
Cash A/c( $153,600 × 8% × 6/12) Dr. $6,144
To Interest revenue $6,144
(To record the semiannual interest received)
(iii) On November 1,
Cash A/c ($43,200 × 98%) Dr. $30,240
Loss on sale of investment A/c Dr. $12,960
To Investment - Walker Co. $43,200
(To record the sale of the bonds)
(iv) On December 31,
Interest receivable A/c Dr. $1,300
To Interest revenue $1,300
(To record the accrual of $1,300 interest)