Entries for Investment in Bonds, Interest, and Sale of Bonds On November 1 Gonza

Question

Entries for Investment in Bonds, Interest, and Sale of Bonds On November 1 Gonzalez Company acquired $208,800 of Walker Co., 6% bonds on May 1 at their face amount. Interest is paid semiannually on May 1 and November 1 Gonzalez Company sold $58,800 of the bonds for 98. ournalize entries to record the following in Year 1: For a compound transaction, if an amount box does not require an entry, leave it blank a. The initial acquisition of the bonds on May 1. May 1 b. The semiannual Interest received on November 1. Nov.1 c. The sale of the bonds on November 1. Nov.1 d. The accrual of $1,500 interest on December 31. Dec. 31

Explanation / Answer

Journal entries Date Account Titles and Explanation Debit Credit May.1 Investment in Bonds (Walker Co.) $208,800 Cash $208,800 (recording of acquisition of bonds) Nov.1 Cash $6,264 Interest on Bond $6,264 (recording of interest income received on bonds) Nov.1 Cash $57,624 Loss on sale of bonds $1,176 Investment in Bonds (Walker Co.) $58,800 (recording of sale of bonds @ 98) Dec.31 Interest Receivables $1,500 Interest on Bond $1,500 (recording of accrued interest income on bond)

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