Jenek Corporation had the following transactions pertaining to debt investments.
ID: 2522075 • Letter: J
Question
Jenek Corporation had the following transactions pertaining to debt investments.
Journalize the transactions. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)
Date
Account Titles and Explanation
Debit
Credit
1. Purchased 67 9%, $2,000 Leeds Co. bonds for $134,000 cash on January 1, 2017. Interest is payable annually on January 1. 2. Accrued interest on Leeds Co. bonds on December 31, 2017. 3. Received interest on Leeds Co. bonds on January 1, 2018. 4. Sold 40 Leeds Co. bonds for $88,440 on January 1, 2018.Explanation / Answer
Journal Entries in the books of Jenek Corporation
Date Accounting titles and explanation Debit Credit
Jan 1,2017 Investments in bonds ac dr. $1,34,000
To cash ac $1,34,000
(Being bonds purchased )
Dec 31,2017 Interest receivable ac dr. $12060
To interest revenue ac $12060
(Being interest accrued during the year)
(2000x67x9/100x12/12)
Jan 1,2018 Cash ac dr. $12060
To interest receivable ac $12060
(Being interest received)
Jan 1,2018 Cash ac dr. $88440
To investment in bonds ac $80,000
To Premium on investment $8440*
Being sale made for 40 bonds at premium)
* Note - Total sale =88440
No. of bonds = 40
Price per bond = 2211
Premium per bond = 211
Premium for all bonds = 8440
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