Answer:
Dr Investment in bonds $755,000
Cr discount on bonds investment $80,000
Cr cash $675,000
December 31:
Dr cash($755,000*4%*6/12) $15,100
Dr discount on bonds investment(difference) $1775
Cr bond interest revenue($675,000*5%*6/12) $16,875
Explanation:
The purchase of the bonds at $675,000 while the face value was $755,000 meant that the bonds were acquired at a discount of $80,000($755,000-$675,000),as a result the appropriate entries would be to credit cash with $675,000 paid as well as the discount on investment with $80,000 while the investment in bonds account is debited with face value of $755,000