Exercise 12-3 Flynn Company purchased 80 Rinehart Company 12%, 10-year, $1,400 b
ID: 2527570 • Letter: E
Question
Exercise 12-3
Flynn Company purchased 80 Rinehart Company 12%, 10-year, $1,400 bonds on January 1, 2015, for $112,000. The bonds pay interest semiannually on July 1 and January 1. On January 1, 2016, after receipt of interest, Flynn Company sold 48 of the bonds for $61,600.
Prepare the journal entries to record the transactions described above. (Round answers to 0 decimal places, e.g. 5,275. 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.)
Date
Account Titles and Explanation
Debit
Credit
January 1, 2015
July 1, 2015
December 31, 2015
January 1, 2016
(To record receipt of interest)
January 1, 2016
(To record sale of bonds)
Date
Account Titles and Explanation
Debit
Credit
January 1, 2015
July 1, 2015
December 31, 2015
January 1, 2016
(To record receipt of interest)
January 1, 2016
(To record sale of bonds)
Explanation / Answer
Journal entry :
Date accounts & explanation debit credit Jan 1, 2015 Investment in bonds 112000 Cash 112000 (To record bonds purchased) July 1,2016 Cash (112000*12%*6/12) 6720 Interest revenue 6720 (To record interest received) Dec 31,2016 Interest receivable 6720 Interest revenue 6720 (To record accured interest) Jan 1,2016 Cash 6720 Interest receivable 6720 (To record receipt of interest) Jan 1,2016 Cash 61600 Loss on sale of bonds 5600 Investment in bonds (48*1400) 67200 (To record sale of bonds)Related Questions
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