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Exercise 16-3 Flynn Company purchased 75 Rinehart Company 10%, 10-year, $1,590 bonds on January 1, 2017,...

Exercise 16-3 Flynn Company purchased 75 Rinehart Company 10%, 10-year, $1,590 bonds on January 1, 2017, for $119,250. The bonds pay interest annually on January 1. On January 1, 2018, after receipt of interest, Flynn Company sold 45 of the bonds for $65,588. Prepare the journal entries to record the transactions described above. (Round answers to 0 decimal places, e.g. 15,250. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit (To record receipt of interest) Jan. 1, 2018 (To record sale of bonds) SHOW LIST OF ACCOUNTS LINK TO TEXT Question Attempts: 0 of 8 used

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Answer #1
Date Accounting Titles Debit Credit
Jan 1, 2017 Debt Instrument (Dr) $119,250
       To Cash $119,250
(To record investment made in Bonds of Rinehart Company)
Dec 31, 2017 Interest Receivable (Dr) $11,925
      To Interest Revenue (75*$1,590*10%) $11,925
(To record interest accrued on Bonds of Rinehart Company)
Jan 1, 2018 Cash (Dr) $11,925
       To Interest Receivable $11,925
(To record receipt of Interest)
Jan 1, 2018 Cash (Dr) $65,588
Loss on Sale of Debt Instrument(Dr) $5,962
     To Debt Instrument ($119,250/75*45) $71,550
(To record sale of Debt Instrument)
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