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15-01 Entries for Investment in Bonds, Interest, and Sale of Bonds Gonzalez Company acquired $188,400 of...

15-01 Entries for Investment in Bonds, Interest, and Sale of Bonds

Gonzalez Company acquired $188,400 of Walker Co., 8% bonds on May 1 at their face amount. Interest is paid semiannually on May 1 and November 1. On November 1, Gonzalez Company sold $46,800 of the bonds for 98.

Journalize entries to record the following in Year 1:

For a compound transaction, if an amount box does not require an entry, leave it blank.

a. The initial acquisition of the bonds on May 1.

May 1

b. The semiannual interest received on November 1.

Nov. 1

c. The sale of the bonds on November 1.

Nov. 1

d. The accrual of $1,888 interest on December 31.

Dec. 31
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Answer #1

Journal entry :

Date account and explanation debit credit
May 1 Debt investment 188400
Cash 188400
(To record acquisition of bond)
Nov 1 Cash (188400*8%*6/12) 7536
Interest revenue 7536
(To record interest received)
Nov 1 Cash (46800*98/100) 45864
Loss on sale of debt investment 936
Debt investment 46800
(To record sale of bonds)
Dec 31 Interest receivable 1888
Interest revenue 1888
(To record accured interest)
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