Lance Co. purchased $36,000 of 6%, 10-year Flin Flon City bonds on March 12, 2014, directly from

Question:

Lance Co. purchased $36,000 of 6%, 10-year Flin Flon City bonds on March 12, 2014, directly from the city at face value as a held-for-trading investment. The bonds pay semiannual interest on May 1 and November 1. On December 1, 2014, Lance Co. sold $14,000 of the Flin Flon City bonds at 102 plus $69 accrued interest, less a $300 brokerage commission.

Provide the journal entries, rounding answers to the nearest dollar, for the following:

a. The purchase of the bonds on March 12, plus 131 days of accrued interest.

b. The semiannual interest on May 1 and November 1.

c. The sale of the bonds on December 1.

d. The adjusting entry for accrued interest of two months on December 31.

Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...