Albright Company purchased as a long-term investment $500,000 of Benton Corporation 10-year, 9% bonds. Required: Present entries

Question

3 years ago

15

Albright Company purchased as a long-term investment $500,000 of Benton Corporation 10-year, 9% bonds. Required: Present entries

to record the following selected transactions: Refer to the Chart of Accounts for exact wording of account titles. March 1 Purchased bonds at their face amount for $500,000. May 1 Sold half the bonds at 98 plus accrued interest of $3,750. The broker deducted $200 for brokerage fees and taxes, remitting the balance.

Business

1 answer:

katen-ka-za [31] · Answer 1 · 2022-02-01T12:46:52+03:00

Answer:

March 1, purchased securities from Benton Corporation:

Dr Investment in securities 500,000

Cr Cash 500,000

May 1, sold half of securities plus accrued interest:

Dr Cash 248,550

Dr Loss on investment in securities 5,000

Dr Brokerage fees 200

Cr Investment in securities 250,000

Cr Interest revenue 3,750

Securities were sold at 98 or $250,000 x 98% = $245,000, which means that the company lost $5,000 with that investment.