(Investments) Aslan County purchased $3,000,000 of bonds as a General Fund investment on March 1, 20X7, for $3,060,000 plus four months accrued interest of $80,000. The bonds mature in four years and two months. 1. The county received the semiannual interest payment on the bonds ($120,000) on April 30, 20X7.

2. The county received the October 31 semiannual interest payment ($120,000).

3. On December 31, the end of Aslan's fiscal year, the fair value of its bond investment was $3,065,000 (excluding accrued interest).

Required (a) Record these transactions in the General Ledger accounts of the Aslan County General Fund. (b) Compute the investment income that should be reported for this investment.

I realize that the initial ledger entry is as follows:

Debit Credit

Mar.20X7 Investments $ 3,060,000

Accrued Interest Receivable 80,000

Cash $ 3,140,000

Recordation for Initial Investment Outlay

It appears that the entries for both (1) and (2) would be :

Debit Credit

(1) Cash 120,000

Revenues - Interest 120,000

(2) Cash 120,000

Revenues - Interest 120,000

If the above is all correct, why do we not deal with the initial $80,000 debited to Accrued Interest Receivable, in the beginning. Do we not have to credit Accrued Interest Receivable for that 80,000 ?

Thanks to all who can help with this question.