Question
Bond (held-to-maturity) investments Demopoulos Company acquired $199,200 of Marimar Co. 5% bonds on May 1 at their face amount as a held-to-maturity investment. Interest is
Bond (held-to-maturity) investments
Demopoulos Company acquired $199,200 of Marimar Co. 5% bonds on May 1 at their face amount as a held-to-maturity investment. Interest is paid semiannually on May 1 and November 1. On November 1, Demopoulos Company sold $45,000 of the bonds for 96.
Journalize the entries to record the following:
If an amount box does not require an entry, leave it blank.
Question Content Area
a. The initial acquisition of the bonds on May 1.
| Date | Account | Debit | Credit |
|---|---|---|---|
| May 1 | CashInterest ReceivableInterest RevenueInvestments-Marimar Co. BondsNotes ReceivableInvestments-Marimar Co. Bonds | Investments-Marimar Co. Bonds | Investments-Marimar Co. Bonds |
| CashInterest ReceivableInterest RevenueInvestments-Marimar Co. BondsNotes ReceivableCash | Cash | Cash |
Feedback Area
Feedback
Question Content Area
b. The semiannual interest received on November 1.
| Date | Account | Debit | Credit |
|---|---|---|---|
| Nov. 1 | CashInterest ReceivableInterest RevenueInvestments-Marimar Co. BondsNotes ReceivableCash | Cash | Cash |
| CashInterest ReceivableInterest RevenueInvestments-Marimar Co. BondsNotes ReceivableInterest Revenue | Interest Revenue | Interest Revenue |
Feedback Area
Feedback
Question Content Area
c. The sale of the bonds on November 1.
| Date | Account | Debit | Credit |
|---|---|---|---|
| Nov. 1 | CashGain on Sale of InvestmentsInterest ReceivableInterest RevenueInvestments-Marimar Co. BondsCash | Cash | Cash |
| Gain on Sale of InvestmentsInterest ReceivableInterest RevenueLoss on Sale of InvestmentsNotes ReceivableLoss on Sale of Investments | Loss on Sale of Investments | Loss on Sale of Investments | |
| CashGain on Sale of InvestmentsInterest ReceivableInvestments-Marimar Co. BondsNotes ReceivableInvestments-Marimar Co. Bonds | Investments-Marimar Co. Bonds | Investments-Marimar Co. Bonds |
Feedback Area
Feedback
Question Content Area
d. The accrual of interest on December 31.
| Date | Account | Debit | Credit |
|---|---|---|---|
| Dec. 31 | CashInterest ReceivableInterest RevenueInvestments-Marimar Co. BondsNotes ReceivableInterest Receivable | Interest Receivable | Interest Receivable |
| CashInterest ReceivableInterest RevenueInvestments-Marimar Co. BondsNotes ReceivableInterest Revenue | Interest Revenue | Interest Revenue |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Financial Accounting Tools for business decision making
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso
6th Edition
978-1119191674, 047053477X, 111919167X, 978-0470534779
