Horngren's Accounting, The Financial Chapters, Student Value Edition (11th Edition)
Horngren's Accounting, The Financial Chapters, Student Value Edition (11th Edition)
11th Edition
ISBN: 9780133876352
Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
Publisher: PEARSON
Question
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Chapter 15, Problem E15.8E
To determine

Concept introduction:

Bond refers to a financial security which is issued by a business entity for raising funds for long-term. Bond generates return for the investors on a specified date and this return can be variable or fixed.

Requirement 1

To prepare:

Journal entries for the transactions of 2016.

Main Solution:

Date Accounts Title Debit Credit
Jan. 1, 2016 Long-term Investment –Held-to-Maturity $150000  
  Cash   $150000
  (For recording purchase of bond)    
       
June.30, 2016 Cash $2250  
  Interest Revenue   $2250
  (For recording interest on bond)    
       
Dec.31, 2016 Cash $2250  
  Interest Revenue   $2250
  (For recording interest on bond)    

To determine

Requirement 2;

To prepare: Journal entry for disposition of bond on maurity.

Main solution:

Date Accounts Title Debit Credit
Dec. 31, 2030 Cash $150000  
  Long-term Investment –Held-to-Maturity   $150000
  (For recording sale of bond)    

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