# 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.

### Financial Accounting

15th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337272124

Chapter
Section

### Financial Accounting

15th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337272124
Chapter 15, Problem 1PEA
Textbook Problem
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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.

(a)

To determine

Journalize the bond investment transactions of H Trust.

### Explanation of Solution

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.

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

 Date Account Titles and Explanations Post. Ref...

(b)

To determine

Prepare journal entry to record the interest revenue received.

(c)

To determine

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

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