EmmyLou Company purchased 70 Harris Company 12%, 10-year, $1,000 bonds on January 1, 2010, for $73,000. EmmyLou

Question:

EmmyLou Company purchased 70 Harris Company 12%, 10-year, $1,000 bonds on January 1, 2010, for $73,000. EmmyLou Company also had to pay $500 of broker’s fees. The bonds pay interest semiannually on July 1 and January 1. On January 1, 2011, after receipt of interest, EmmyLou Company sold 40 of the bonds for $40,100.

Instructions

Prepare the journal entries to record the transactions described above.