Question

Parilo Company acquired $183,600 of Makofske Co., 4% bonds on May 1, 2016, at their face...

Parilo Company acquired $183,600 of Makofske Co., 4% bonds on May 1, 2016, at their face amount. Interest is paid semiannually on May 1 and November 1. On November 1, 2016, Parilo Company sold $43,800 of the bonds for 97.

Journalize entries to record the following (refer to the Chart of Accounts for exact wording of account titles):

May 1 Initial acquisition of the bonds
Nov. 1 Semiannual interest received
1 Sale of the bonds
Dec. 31 Accrual of $932 interest
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Answer #1

Journal entries :

Date account and explanation debit credit
May 1 Bond investment 183600
Cash 183600
(To record initial investment)
Nov 1 Cash (183600*4%*6/12) 3672
Interest revenue 3672
(To record semiannual interest)
Nov 1 Cash (43800*.97) 42486
Loss on sale of investment 1314
Bond investment 43800
(To record sale of investment)
Dec 31 Cash (139800*4%*2/12) 932
Interest revenue 932
(To record interest revenue)
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