On November 1, 2017, Reid Corporation acquired bonds with a face value of $500,000 for $481,156.15. The bonds carry a stated rate of interest of 10%, were purchased to yield 11%, pay interest semiannually on April 30 and October 31, were purchased to be held to maturity, and are due October 31, 2021. On November 1, 2018, in contemplation of a major acquisition, the bonds were sold for $500,000. Reid is on a fiscal year accounting period ending October 31 and uses the effective interest method.

Required:

Prepare journal entries to record the purchase of the bonds, the interest receipts on April 30, 2018, and October 31, 2018, and the sale of the bonds.

CHART OF ACCOUNTS

Reid Corporation

General Ledger

	ASSETS
111	Cash
121	Accounts Receivable
137	Interest 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
434	Gain on Sale of Debt Securities

	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
599	Loss on Sale of Debt Securities
910	Income Tax Expense

Prepare journal entries to record the purchase of the bonds, the interest receipts on April 30, 2018, and October 31, 2018, and the sale of the bonds. Additional Instructions

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GENERAL JOURNAL

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