Question

Leonard Technologies invests $62,000 to acquire $62,000 face​ value, 10​%, five - year corporate bonds on December​ 31, 2014. The bonds will mature on December​ 31, 2019. The bonds pay interest semi-annually on December 31 and June 30 every year until maturity. Assume Leonard Technologies uses a calendar year. Based on the information​ provided, which of the following will be included in the journal entry for the transaction on December​ 31, 2018?
a. a debit to Interest Revenue for $5,400.
b. a credit to Interest Revenue for $2,700.
c. a debit to Interest Revenue for $2,700.
d. a credit to Interest Revenue for $5,400.

Answer 1

Answer:

Credit to Interest Revenue for $3,100

Explanation:

Date      Account Titles and Explanation                   Debit        Credit

Dec 31.     Cash ($62,000 * 10% * 6/12)                       $3,100

                 Interest Revenue                                                           $3,100

     (To record interest revenue for the semi

       annual period ended December 31, 2018)