Question

Bond Investment Transactions

Journalize the entries to record the following selected bond investment transactions for Starks Products:

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

a. Purchased for cash $96,000 of Iceline, Inc. 9% bonds at 100 plus accrued interest of $1,440, paying interest semiannually.

	Investments-Iceline, Inc. Bonds
	Interest Receivable
	Cash

b. Received first semiannual interest payment.

	Cash
	Interest Receivable
	Interest Revenue

c. Sold $64,000 of the bonds at 102 plus accrued interest of $490.

	Cash
	Interest Revenue
	Gain on Sale of Investments
	Investments-Iceline, Inc. Bonds

Answer 1

a. Purchased for cash $96,000 of Iceline, Inc. 9% bonds at 100 plus accrued interest of $1,440, paying interest semiannually.

	Investments-Iceline, Inc. Bonds	96000
	Interest Receivable	1440
	Cash		97440

b. Received first semiannual interest payment.

	Cash	4320
	Interest Receivable		1440
	Interest Revenue		2880

c. Sold $64,000 of the bonds at 102 plus accrued interest of $490.

	Cash (64000*1.02+490)	65770
	Interest Revenue		490
	Gain on Sale of Investments		1280
	Investments-Iceline, Inc. Bonds		64000