Question

Prepare Garzon Company's journal entries to record the following transactions for the current year. January 1 Purchases 9.5% bonds (as a held-to-maturity investment) issued by PBS at a cost of $45,600, which is the par value. June 30 Receives first semiannual payment of interest from PBS bonds. December 31 Receives a check from PBS in payment of principal ($45,600) and the second semiannual payment of interest.
View transaction list 8 02:53:53 Journal entry worksheet 2 3 Purchases 9% bonds (as a held-to-maturity investment) issued by PBS at a cost of $52,000, which is the par value. Note: Enter debits before credits. Date General Journal Debit Credit Jan. 1 Record entry Clear entry View general journal

Answer 1

Answer:

Garzon Company

Journal Entries

January 1 Debit 9.5% Bonds Receivable PBS $45,600

Credit Cash $45,600

To record the purchase of bonds in PBS.

June 30 Debit Cash $2,166

Credit Bonds Interest Revenue $2,166

To record the receipt of first semiannual interest.

December 31 Debit Cash $47,766

Credit 9.5% Bonds Receivable $45,600

Credit Bonds Interest Revenue $2,166

To record the receipt of both principal and second semiannual interest.

January 1 Debit 9% Bonds Receivable PBS $52,000

Credit Cash $52,000

To record the purchase of bonds in PBS.

June 30 Debit Cash $2,340

Credit Bonds Interest Revenue $2,340

To record the receipt of first semiannual interest.

December 31 Debit Cash $54,340

Credit 9% Bonds Receivable $52,000

Credit Bonds Interest Revenue $2,340

To record the receipt of both principal and second semiannual interest.

Explanation:

a) Data and Analysis:

January 1 9.5% Bonds Receivable PBS $45,600 Cash $45,600

June 30 Cash $2,166 Bonds Interest Revenue $2,166

December 31 Cash $47,766 9.5% Bonds Receivable $45,600 Bonds Interest Revenue $2,166

January 1 9% Bonds Receivable PBS $52,000 Cash $52,000

June 30 Cash $2,340 Bonds Interest Revenue $2,340

December 31 Cash $54,340 9% Bonds Receivable $52,000 Bonds Interest Revenue $2,340