Exercise 16-2 Jenek Corporation had the following transactions pertaining to deb

Question

Exercise 16-2 Jenek Corporation had the following transactions pertaining to debt investments . Purchased 40 8%, $1,900 Leeds Co. bonds for $76,000 cash. Interest is payable annually on January 1, 2017 2. Accrued interest on Leeds Co. bonds on December 31, 2017 3. Received interest on Leeds Co. bonds on January 1, 2018 4 Sold 24 Leeds Co. bonds for $51,680 on January 1, 2018 Journalize the transactions. (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 o for the amounts. Record journal entries in the order presented in the problem. Round answers to 0 decimal places, e.g. 5,275.) Na. Acceant Titles and Esplanation

Explanation / Answer

Jenek Corporation

Journal Entries to record transactions relating to debt investments:

Journal Entries

Date

Account Titles and Explanation

Debit

Credit

1-Jan-17

Debt Investment

$76,000

Cash

$76,000

(To record purchase of 40 8% Leeds Co bonds at $1,900 each)

31-Dec-17

Interest Receivable

$6,080

Interest Revenue

$6,080

(To record accrued interest on bonds, 8% x 76,000 = $6,080)

1-Jan-18

Cash

$6,080

Interest Receivable

$6,080

(To record interest received on bonds)

1-Jan-18

Cash

$51,680

Debt Investment

$45,600

Gain on Sale of Debt Investments

$6,080

(To record sale of investment and gain on sale, 51,680 - (24 x $1,900) =6,080)

Journal Entries

Date

Account Titles and Explanation

Debit

Credit

1-Jan-17

Debt Investment

$76,000

Cash

$76,000

(To record purchase of 40 8% Leeds Co bonds at $1,900 each)

31-Dec-17

Interest Receivable

$6,080

Interest Revenue

$6,080

(To record accrued interest on bonds, 8% x 76,000 = $6,080)

1-Jan-18

Cash

$6,080

Interest Receivable

$6,080

(To record interest received on bonds)

1-Jan-18

Cash

$51,680

Debt Investment

$45,600

Gain on Sale of Debt Investments

$6,080

(To record sale of investment and gain on sale, 51,680 - (24 x $1,900) =6,080)

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