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kirill [66]
2 years ago
6

The following bond investment transactions were completed during a recent year by Starks Company: Year 1 Jan. 31 Purchased 75, $

1,000 government bonds at 100 plus accrued interest of $375 (one month). The bonds pay 6% annual interest on July 1 and January 1. July 1 Received semiannual interest on bond investment. Aug. 30 Sold 35, $1,000 bonds at 98 plus $350 accrued interest (two months).
a. Journalize the entries for these transactions.
b. Provide the December 31, Year 1, adjusting journal entry for semiannual interest earned on the bonds.
Business
1 answer:
Nadusha1986 [10]2 years ago
3 0

Answer and Explanation:

The Journal entries is shown below:-

Jan 31

Investment in Govt Bonds Dr, $75,000

Interest Receivable Dr, $375  

      To Cash 75,375

(Being cash is recorded)

July 31

Cash Dr $2,250  

      To Interest Receivable $375

       To Interest Income 1,875

($75000 × 6% × 5 ÷ 12)

(Being interest on bond is recorded)

Aug 30

Cash Dr, $34,650

Loss on Sale of Bonds Dr, $700

($35,000 - 980 × $35)                

     To Investment in Govt Bonds $35,000

      To Interest Income $350

(Being loss on sale is recorded)

Dec 31

Interest Receivable Dr,  $1,200  

To Interest Income $1,200

(40 × $1,000 × 6% × 6 ÷ 12)

(Being interest on bonds is recorded)

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Cost ConceptOn February 3, Clairemont Repair Service extended an offer of $360,000 for land that had been priced for sale at $40
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The land should be recorded in Clairemont Repair Service’s records at $380,000

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Answer:

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A. Journal entries

1.Raw Materials Purchased.

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Credit Accounts Payable Account with $ 169,000

2.Labour Costs incurred

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Debit Indirect labor with $ 182,000

Debit Sales commissions with $ 25,000

Debit Administrative salaries with $ 45,000

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Debit Office Rent for the year with $5,900

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Credit Cash Account with $20,000

5.Advertising Expense Incurred

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Credit Cash Account with $15,000

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