Gaelic Industries Inc. is an athletic footware company that began operations on

Question

Gaelic Industries Inc. is an athletic footware company that began operations on January 1, 2016. The following transactions relate to debt investments acquired by Gaelic Industries Inc., which has a fiscal year ending on December 31:

Record these transactions on page 10

Record these transactions on page 11

Required:

Income Summary

1. Journalize the entries to record the transactions. Be sure to enter the year as part of the date for the first entry on each page. Refer to the information given and the Chart of Accounts provided for the exact wording of the answer choices for text entries. In your computations, round per share amounts to two decimal places.

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JOURNAL

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Adjusting Entries

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JOURNAL

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2016 May 1 Purchased $75,000 of Avery Co. 7%, 15-year bonds at their face amount plus accrued interest of $875. The bonds pay interest semiannually on March 1 and September 1. 16 Purchased $60,000 of Clawhammer 6%, 10-year bonds at their face amount plus accrued interest of $150. The bonds pay interest semiannually on May 1 and November 1. Sept. 1 Received semiannual interest on the Avery Co. bonds. 30 Sold $30,000 of Avery Co. bonds at 98 plus accrued interest of $175. Nov. 1 Received semiannual interest on the Clawhammer bonds. Dec. 31 Accrued $1,050 interest on the Avery Co. bonds. 31 Accrued $600 interest on the Clawhammer bonds.

Explanation / Answer

Journal Entries Date Account Title Dr $ Cr $ May 1. Investment -Avery Co Bond             75,000 Accrued Ineterst Receivable                   875 Cash       75,875 May 16. Investment -ClawHammer Bond             60,000 Accrued Ineterst Receivable                   150 Cash       60,150 Sep 1. Accrued Ineterst Receivable             875 Interest Revenue          1,750 Cash                2,625 Sep 30. Investment -Avery Co Bond       30,000 Interest Revenue             175 Cash               29,575 Loss on Sale of Investment             600 Nov 1. Accrued Ineterst Receivable             150 Interest Revenue          1,650 Cash                1,800 Dec 31. Accrued Ineterst Receivable                1,050 Interest Revenue          1,050 ( interest accrued Avery Bond) Accrued Ineterst Receivable                   600 Interest Revenue             600 (Interest accrued Clawhammer bond) Mar 1. Accrued Ineterst Receivable          1,050 Interest Revenue             525 Cash                1,575 ( Avery Bond ineterest receipt) May 1. Accrued Ineterst Receivable             600 Interest Revenue          1,200 Cash                1,800 ( Clawhammer Bond ineterest receipt)

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