Question

Jacks Corporation purchases $200,000 bonds plus accrued interest for 2 months of $2,000 from Kennedy Company on March 1. Thebonds have an annual interest rate of 6% payable on June 30 and December 31. The entry to record the purchase of the bonds wouldinclude:a. Interest Receivable debit $2,000.b. Cash credit $200,000.c. Interest Revenue credit $2,000.d. Investment in Bonds debit $202,000

Answer 1

Answer:

The journal entry would include:

a. Interest Receivable debit $2,000.

The journal entry would be:

Account                         Debit                Credit

Cash                                                       $202,000

Interest Receivable      $2,000

Investment in bonds    $200,000