Journalize the entries to record the following selected bond investment transactions for Hall Trust:a. Purchased for cash $240,000 of Medina City 6% bonds at 100 plus accrued interest of $3,600.b. Received first semiannual interest payment.c. Sold $120,000 of the bonds at 98 plus accrued interest of $600.

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Asked Dec 20, 2019
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Journalize the entries to record the following selected bond investment transactions for Hall Trust:
a. Purchased for cash $240,000 of Medina City 6% bonds at 100 plus accrued interest of $3,600.
b. Received first semiannual interest payment.
c. Sold $120,000 of the bonds at 98 plus accrued interest of $600.

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Expert Answer

Step 1

a.

Prepare journal entry for purchase of $240,000 bonds of M City at 100% with an accrued interest of $3,600.

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Post. Debit ($) Credit (S) Date Account Titles and Explanations Ref. Investments-M City 240,000 Interest Receivable 36,000 Cash 276,000 (To record purchase of M City bonds for cash)

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Step 2

b.

Prepare journal entry to record the...

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Post. Account Titles and Explanations Debit ($) Credit ($) Date Ref. Cash Interest Receivable Interest Revenue (To record receipt of interest revenue) 7,200 3,600 3,600 Working Notes: Compute amount of interest received from M City. (Amount of debt investment x Interest received= {Rate of interest x Time peri od = $240,000x6%x. 12 = $7,200

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