Answer:
1st July,2018
investment in bond $515,000 ( debit)
discount on bond investment $80000 (credit)
Lance Brothers paid $435,000 ( credit)
31st, December 2018
cash $7725 (debit)
discount on bond 975 ( debit )
interest revenue is $8700 (credit )
Explanation:
Given data
investment = $515,000
bond = 3%
interest rate = 4%
Lance Brothers paid = $435,000
to find out
investment in the bonds on July 1 and interest on December 31
solution
we know here
on 1st July,2018
investment in bond that is = $515,000 ( debit)
and we know Lance Brothers paid = $435,000 ( credit)
so discount on bond investment = 515000 - 435000 = $80000 (credit)
and
on 31st, December 2018
cash will be = investment in bond × 3% /2
cash = 515,000 × 3% /2
cash = 15450 /2 = $7725 (debit)
interest revenue = Lance Brothers paid × 4% / 2
interest revenue = 435,000 × 4% / 2
interest revenue is 17400 /2 = $8700 (credit )
so and discount on bond = interest - cash
discount on bond = 8700 - 7725 = 975 ( debit )
