Torres Investments acquired $260,400 of Murphy Corp., 10% bonds at their face amount on October 1, Year 1. The bonds pay interest on October 1 and April 1. On April 1, Year 2, Torres sold $67,600 of Murphy Corp. bonds at 103.

Journalize the entries to record the following (refer to the Chart of Accounts for exact wording of account titles):

a.The initial acquisition of the Murphy Corp. bonds on October 1, Year 1.b.The adjusting entry for three months of accrued interest earned on the Murphy Corp. bonds on December 31, Year 1.c.The receipt of semiannual interest on April 1, Year 2.d.The sale of $67,600 of Murphy Corp. bonds on April 1, Year 2, at 103.

HART OF ACCOUNTSTorres InvestmentsGeneral Ledger

ASSETS110Cash111Petty Cash120Accounts Receivable121Allowance for Doubtful Accounts131Notes Receivable132Interest Receivable141Merchandise Inventory145Office Supplies146Store Supplies151Prepaid Insurance161Investments-Murphy Corp. Bonds165Valuation Allowance for Trading Investments166Valuation Allowance for Available-for-Sale Investments181Land191Store Equipment192Accumulated Depreciation-Store Equipment193Office Equipment194Accumulated Depreciation-Office Equipment LIABILITIES210Accounts Payable221Notes Payable231Interest Payable241Salaries Payable251Sales Tax Payable EQUITY311Common Stock312Paid-In Capital in Excess of Par-Common Stock321Preferred Stock322Paid-In Capital in Excess of Par-Preferred Stock331Treasury Stock332Paid-In Capital from Sale of Treasury Stock340Retained Earnings350Unrealized Gain (Loss) on Available-for-Sale Investments351Cash Dividends352Stock Dividends390Income Summary REVENUE410Sales611Interest Revenue612Dividend Revenue631Gain on Sale of Investments641Unrealized Gain on Trading Investments EXPENSES511Cost of Merchandise Sold512Bad Debt Expense515Credit Card Expense516Cash Short and Over520Salaries Expense531Advertising Expense532Delivery Expense533Repairs Expense534Selling Expenses535Rent Expense536Insurance Expense537Office Supplies Expense538Store Supplies Expense561Depreciation Expense-Store Equipment562Depreciation Expense-Office Equipment590Miscellaneous Expense710Interest Expense731Loss on Sale of Investments741Unrealized Loss on Trading Investments