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EleoNora [17]
3 years ago
6

Leonard Technologies invests $ 62,000 to acquire $ 62,000 face​ value, 8​%, fiveminusyear corporate bonds on December​ 31, 2014.

The bonds will mature on December​ 31, 2019. The bonds pay interest semiannually 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
Business
1 answer:
navik [9.2K]3 years ago
7 0

Answer:

Find attached correct question that matches the options provided in this question:

The correct option is B, a credit to Interest Revenue for $2,700

Explanation:

The semiannual coupon interest receivable from the bond investment is the face value of $54,000 multiplied by 10% adjusted to reflect a six month revenue rather than a year a shown below:

semiannual interest receipt=$54,000*10%*6/12=$2,700

The $2,700 would be debited to cash as an income while also being credited to interest revenue ,hence option B is correct

Download xlsx
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