Record the entry for the purchase of the bonds by West Company on July 1.
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter9: Long-term Liabilities
Section: Chapter Questions
Problem 15MCQ
Related questions
Question
On July 1 of the current year, West Company purchased for cash, 16, $10,000 bonds of North Corporation at a market rate of 6%. The bonds pay 5% interest, payable on a semiannual basis each July 1 and January 1, and mature in three years on July 1. The bonds are classified as trading securities. The annual reporting period ends December 31. Assume the effective interest method of amortization of any discounts or premiums. Ignore income taxes.
Note: When answering the following questions, round answers to the nearest whole dollar.
- Amortization Schedule
Journal Entries in Year 1- Journal Entries in Year 2
b. Record the entry for the purchase of the bonds by West Company on July 1.
Date | Account Name | Debit | Credit |
---|---|---|---|
Jul. 1, Year 1 |
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