Chapter 15, Problem 15.1APE

(a)

To determine

Bond investment: Bond investments are debt securities which pay a fixed interest revenue to the investor.

Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Debit and credit rules:

• Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts.
• Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.

To journalize: The bond investment transactions of H Trust

(b)

To determine

To journalize: Prepare journal entry to record the interest revenue received.

(c)

To determine

To journalize: Prepare journal entry for $120,000 bonds of M City sold at 98%, with an accrued interest of $600.