Exercise 7-12: Starship Enterprises enters into the following transactions during 2016 and 2017: 2016 Jan.1:             Purchased $100,000 face value of Northern Lights Inc. bonds at face value. The newly issued bonds have an interest rate of 8% paid semiannually on June 30 and         December 31. The bonds mature in five years. June 30:         Received interest on the Northern Lights Inc. bonds. Dec. 31:         Received interest on the Northen Lights Inc. bonds. 2017 Jan. 1:            Sold the Northen Lights Inc. bonds for $102,000.   Prepare all necessary journal entries on Starship’s records to account for its investment in the Northern Lights bonds. Why was Starship able to sell its Northern Lights bonds for $102,000?

Financial Accounting: The Impact on Decision Makers
10th Edition
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Gary A. Porter, Curtis L. Norton
Chapter7: Receivables And Investments
Section: Chapter Questions
Problem 7.12E
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Exercise 7-12: Starship Enterprises enters into the following transactions during 2016 and 2017:

2016

Jan.1:             Purchased $100,000 face value of Northern Lights Inc. bonds at face value.

The newly issued bonds have an interest rate of 8% paid semiannually on June 30 and         December 31. The bonds mature in five years.

June 30:         Received interest on the Northern Lights Inc. bonds.

Dec. 31:         Received interest on the Northen Lights Inc. bonds.

2017

Jan. 1:            Sold the Northen Lights Inc. bonds for $102,000.

 

  1. Prepare all necessary journal entries on Starship’s records to account for its investment in the Northern Lights bonds.
  2. Why was Starship able to sell its Northern Lights bonds for $102,000? 
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