QUESTION 5 (Debt Investments, Fair Value Option) On January I, 2018, Novotna Com

Question

QUESTION 5 (Debt Investments, Fair Value Option) On January I, 2018, Novotna Company purchased €400,000, 8% bonds of Aguirre Co. for €369,114. The bonds were purchased to yield 10% interest. Interest is payable semiannually on July 1 and January 1. The bonds mature on January 1, 2023. Novotna Company plans to hold the bonds to collect contractual cash flows. On January I, 2020, after receiving interest, Novotna Company sold the bonds for €370,726 after receiving interest to meet its liquidity needs.
Prepare the journal entry to record the sale of the bonds on January 1, 2020. QUESTION 5 (Debt Investments, Fair Value Option) On January I, 2018, Novotna Company purchased €400,000, 8% bonds of Aguirre Co. for €369,114. The bonds were purchased to yield 10% interest. Interest is payable semiannually on July 1 and January 1. The bonds mature on January 1, 2023. Novotna Company plans to hold the bonds to collect contractual cash flows. On January I, 2020, after receiving interest, Novotna Company sold the bonds for €370,726 after receiving interest to meet its liquidity needs.
Prepare the journal entry to record the sale of the bonds on January 1, 2020.
Prepare the journal entry to record the sale of the bonds on January 1, 2020.

Explanation / Answer

Date General Journal Debit Credit January 1, 2020 Debt Investment €369,114 Cash €369,114

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