QS 15-6 Debt securities transactions LO P2 On January 1, 2017, Garzon purchased

Question

QS 15-6 Debt securities transactions LO P2

On January 1, 2017, Garzon purchased 9.00% bonds issued by PBS Utilities at a cost of $53,600, which is their par value. The bonds pay interest semiannually on July 1 and January 1. For 2017, prepare entries to record Garzon's July 1 receipt of interest and its December 31 year-end interest accrual. (Do not round your intermediate calculations.)

QS 15-6 Debt securities transactions LO P2

On January 1, 2017, Garzon purchased 9.00% bonds issued by PBS Utilities at a cost of $53,600, which is their par value. The bonds pay interest semiannually on July 1 and January 1. For 2017, prepare entries to record Garzon's July 1 receipt of interest and its December 31 year-end interest accrual. (Do not round your intermediate calculations.)

Explanation / Answer

Calculation of Interest: -
$53600 * 9% * 6/12 = $2412
Both the interest receipt and accrual are at the interval of 6 months.

Date Account Titles Debit Credit July 1, 2017 Cash $2412    Interest Earned $2412 (For receipt of Interest on July 2017) Dec 31, 2017 Interest Receivable $2412    Interest Earned $2412 (For accrual of interest on Dec 31 2017)

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