The following bond investment transactions were completed during 2012 by Mission
ID: 2370866 • Letter: T
Question
The following bond investment transactions were completed during 2012 by Mission Company:
Jan. 21 Purchased 50, $1,000 par value government bonds at 100 plus 20 days' accrued interest. The bonds pay 4.5% annual interest on June 30 and January 1.
June 30 Received semiannual interest on bond investment.
Sept. 5 Sold 24, $1,000 par value bonds at 97 plus $201 accrued interest.
a. Journalize the entries for these transactions.
Assume a 360-day year. Do not round interim calculations. Round final answers to nearest dollar. For a compound transaction, if an amount box does not require an entry, leave it blank.
Explanation / Answer
a. Journalize the entries for these transactions.
Jan. 21 Purchased 50, $1,000 par value government bonds at 100 plus 20 days' accrued interest. The bonds pay 4.5% annual interest on June 30 and January 1.
Investment in Govt Bond A/c Dr 50,000
Accrued Interest A/c Dr 125
To Bank A/c 50,125
(Being Bond Purchased)
June 30 Received semiannual interest on bond investment.
Bank A/c Dr 1125
To Accrued Interest 1125
(being accrued interest on bond recieved)
Sept. 5 Sold 24, $1,000 par value bonds at 97 plus $201 accrued interest.
Bank A/c Dr 2529
P&L A/c (Loss on investment sold) Dr 72
To Investment in Govt Bond A/c 2400
To Accrued Interest 201
(Being bond sold recognised)
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