Ruben Company purchased $100,000 of Evans Company bonds at 100 plus $1,500 in ac

Question

Ruben Company purchased $100,000 of Evans Company bonds at 100 plus $1,500 in accrued interest. The bond interest rate is 8% and
interest is paid semi-annually. The journal entry to record the purchase would be:
a. Debit: Investment in Bonds $100,000; Credit: Interest Revenue $1,500 and Cash $98,500
b. Debit: Investment in Bonds $100,000 and Interest Receivable $1,500; Credit: Cash $101,500
c. Debit: Investment in Bonds $101,500; Credit: Cash $101,500
d. Investment in Bonds $100,000; Credit: Cash $100,000

Explanation / Answer

b. Debit: Investment in Bonds $100,000 and Interest Receivable $1,500; Credit: Cash $101,500

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