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Gonzalez Company acquired $190,800 of Walker Co., 8% bonds on May 1 at their face amount....

Gonzalez Company acquired $190,800 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 $51,000 of the bonds for 99.

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 $1,864 interest on December 31.

Dec. 31
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Answer #1

Journal entry :

Date accounts & explanation debit credit
May 1 Bond investment 190800
Cash 190800
(To record bond purchase)
Nov 1 Cash (190800*8%*6/12) 7632
Interest revenue 7632
(To record interest)
Nov 1 Cash (51000*99/100) 50490
Loss on sale of bond investment 510
Bonds investment 51000
(To record sale of bonds)
Dec 31 Interest receivable 1864
Interest revenue 1864
(To record accured interest)
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