Problem 2

Floyd Corporation had the following transactions pertaining to debt investments:

Jan. 1 Purchased 50 8%, $1,000 Petal Company bonds for $50,000 cash plus

brokerage fees of $900. Interest is payable semiannually on July and

January.

July 1 Received semiannual interest on Petal Company bonds.

July 1 Sold 30 Petal Company bonds for $34,000 less $500 brokerage fees.

Instructions

1. Journalize the transactions.
2. Prepare the adjusting entry for the accrual of interest at December 31.