The following bond investment transactions were completed during a recent year by Starks Company:Year 1Jan. 31. Purchased 75, $1,000 government bonds at 100 plus accrued interest of $375 (one month). The bonds pay 6% annual interest on July 1 and January 1.July 1. Received semiannual interest on bond investment.Aug. 30. Sold 35, $1,000 bonds at 98 plus $350 accrued interest (two months).a. Journalize the entries for these transactions.b. Provide the December 31, Year 1, adjusting journal entry for semiannual interest earned on the bonds.

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Asked Dec 20, 2019
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The following bond investment transactions were completed during a recent year by Starks Company:
Year 1
Jan. 31. Purchased 75, $1,000 government bonds at 100 plus accrued interest of $375 (one month). The bonds pay 6% annual interest on July 1 and January 1.
July 1. Received semiannual interest on bond investment.
Aug. 30. Sold 35, $1,000 bonds at 98 plus $350 accrued interest (two months).
a. Journalize the entries for these transactions.
b. Provide the December 31, Year 1, adjusting journal entry for semiannual interest earned on the bonds.

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Prepare joumal entry for purchase of 75 $1,000 govemment bonds at 100% with an accrued interest of $375. Post. Ref. Debit ($) Credit (S) Date Account Titles and Explanations January 31 Investments-G Bonds Interest Receivable 75,000 375 75,375 Cash (To record purchase of government | bonds for cash) Working Notes: Compute cost of govemment bonds. Number of bonds purchasedx Cost of bonds = Price per bond (75 bonds xS1,000) = $75,000 Prepare joumal entry to record the interest revenue received. Post. Account Titles and Explanations Debit (S) Credit (S) Date Ref. 1 Cash July 2,250 Interest Receivable Interest Revenue (To record receipt of mterest reveniie) 375 1,875 Working Notes: Compute amount of interest received. Amount of debt investment x Interest reccived = Rate of interest x Time period = $75,000x6%x 12 = $2,250

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Prepare journal entry for 35 $1.000 bonds sold at 98%, with an accrued interest of $350 Credit (S) Post. Debit Account Titles and Explanations Date (S) Ref. Cash August| 30 34,650 700 Loss on Sale of Investments 350 35,000 Interest Revenue Investments-G Bonds (To record sale of bonds) Working Notes: Calculate the cash received from the sale of bonds. Particulars sale Amount (S) Cash proceeds (35 bondsxS1,000 x 98%) from of 35 bonds 34,300 Add: Accrued interest revenue Cash received 350 $34,650 Calculate the realized gain aoss) on sale of 35 bonds. Particulars of Amount (S) 34,300 Cash (35 bon dsx$1,000 x 98%) Cost of bonds sold (35 bon dsx$1,000) proceeds bonds from sale 35 (35,000) Gain (loss) on sale of bonds S(700)

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