(#6) Held-to-Maturity Bond Investment

On January 1, 2018, Gatrong Corporation purchased 13%, 5-year Fleming Corporation bonds with a face value of $200,000. It expects to hold these bonds until maturity. The bonds pay interest semiannually on June 30 and December 31. Gatrong paid $215,075, a price that yields a 11% effective annual interest rate.

Required:

Prepare the journal entry of Gatrong to record the purchase of the bonds.

CHART OF ACCOUNTS

Gatrong Corporation

General Ledger

	ASSETS
111	Cash
121	Accounts Receivable
141	Inventory
152	Prepaid Insurance
181	Equipment
189	Accumulated Depreciation
191	Investment in Held-to-Maturity Debt Securities

	LIABILITIES
211	Accounts Payable
231	Salaries Payable
250	Unearned Revenue
261	Income Taxes Payable

	EQUITY
311	Common Stock
331	Retained Earnings

	REVENUE
411	Sales Revenue
431	Interest Income

	EXPENSES
500	Cost of Goods Sold
511	Insurance Expense
512	Utilities Expense
521	Salaries Expense
532	Bad Debt Expense
540	Interest Expense
541	Depreciation Expense
559	Miscellaneous Expenses
910	Income Tax Expense

Prepare the journal entry of Gatrong to record the purchase of the bonds on January 1.

GENERAL JOURNAL !(Just need the amounts)!

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
1	Jan. 1	Investment in Held-to-Maturity Debt Securities
2		Cash