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3 years ago

Bond Investment Transactions

Business

1 answer:

Kitty [74]3 years ago

4 0

Answer:

Explanation:

The journal entries are shown below:

a) Investment in bonds Dr A/c$120000

Interest receivable Dr A/c$ 1000

To Cash A/c $121000

(purchased of 5% bonds with accrued interest of $1000 on the bonds for cash is recorded)

b) Cash Dr. A/c $3000 ($120,000 × 5% × 6 months ÷ 12 months)

To Interest receivable A/c $1000

To Interest Revenue A/c $2000

(Being the first semiannual interest payment is received)

c) Cash Dr A/c $61100 ($60,000 × 101 + $500)

To Investment in bonds $60000

To Interest Revenue $ 500

To Gain in sale of investment $600

( Being the sale of bond with accrued interest of $500 is recorded and the remaining amount will be credited to the gain in sale of investment)

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