The following bond investment transactions were completed during 2010 by Torrence Company Jan 21 Purchased 30, $1, 000 par value government bonds at 100 plus 20 days accrued interest The bonds pay 6 annual interest on June 30 and January 1 June 30 Received semiannual interest on bond investment Sep...

a b Date 21Jan Investments Particulars Interest Receiva ...

The following bond investment transactions were completed during 2010 by Torrence Company: Jan. 21. Purchased 30, $1,

Question:

The following bond investment transactions were completed during 2010 by Torrence
Company:
Jan. 21. Purchased 30, $1, 000 government bonds at 100 plus 20 days’ accrued interest. The bonds pay 6% annual interest on June 30 and January 1.
June 30. Received semiannual interest on bond investment.
Sept. 5. Sold 12, $1,000 bonds at 98 plus $134 accrued interest.
(a) Journalize the entries for these transactions.
(b) Provide the December 31, 2010, adjusting journal entry for semiannual interest earned from the bond coupon.

Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...