Answered step by step
Verified Expert Solution
Question
1 Approved Answer
On 1/1/14, ABC Corporation purchased, as a held-to-maturity investment, $190,000 of the 8%, 5-year bonds of Intuit Corporation for $168,934, which provides an 11% return.
On 1/1/14, ABC Corporation purchased, as a held-to-maturity investment, $190,000 of the 8%, 5-year bonds of Intuit Corporation for $168,934, | |||||||||
which provides an 11% return. Prepare ABC's 12/31/14 journal entry to reflect the receipt of annual interest and discount amortization. | |||||||||
Assume the bond investment pays interest annually on 12/31 each year and that effective interest amortization is used. |
I made this journal entry:
Cash | 15,200 | ||
LT (Debt) investments (HTM) | 3,383 | ||
Interest Revenue | 18,583 | ||
(to record annual interest revenue and discount amortization) | Is this correct? |
|
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