On January 1, 2013, Dagwood Company purchased at par 10% bonds having a maturity

Question

On January 1, 2013, Dagwood Company purchased at par 10% bonds having a maturity value of $317,400. They are dated January 1, 2013, and mature January 1, 2018, with interest receivable December 31 of each year. The bonds are classified in the held-to-maturity category.

(Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

No.

Date

Account Titles and Explanation

Debit

Credit

(a)

(b)

(c)

(a) Prepare the journal entry at the date of the bond purchase. (b) Prepare the journal entry to record the interest received for 2013. (c) Prepare the journal entry to record the interest received for 2014.

Explanation / Answer

Solution debt Investment will be debited at held to maturity value and cash will be credited as cash is reducing on the purchase of the bond ad for other two transactions we will DEbit cash as Cash( assset ) is increasing on the virtue of Interest income

No. Date Account Titles and Explanation Debit Credit (a) Jan. 1, 2013 Debt Investments $317,400 Cash A/C $317,400 (b) Dec. 31, 2013 Cash A/C $31740 Interest income $31740 (c) Dec. 31, 2014 Cash A/C $31740 Interest income $31740

Related Questions

Navigate

• Browse (All)
• Browse O
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.