eBook

Show Me How

Entries for investment in bonds, interest, and sale of bonds

Instructions

Bocelli Co$.$ purchased $$135,000$ of $6\%,20-$year Sanz County bonds on May $11,$ Year $1,$ directly from the county, at their face amount plus accrued interest The bonds pay semiannual interest on April $1$ and October $1.$ On October $31,$ Year $1,$ Bocelli Co$.$ sold $$28,800$ of the Sanz County bonds at $96$ plus $$144$ accrued interest less a $$85$ brokerage commission.

Provide journal entries for the following $($refer to the Chart of Accounts for exact wording of account titles$)$:

a$.$ The purchase of the bonds on May $11$ plus $40$ days of accrued interest; assume a $360-$day year.

b$.$ Semiannual interest on October $1.$

c$.$ Sale of the bonds on October $31.$

d$.$ Adjusting entry for accrued interest of $$1,593$ on December $31,$ Year $1.$