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)
