Exercise 12-3 Flynn Company purchased 50 Rinehart Company 13%, 10-year, $1,800 b
ID: 2599989 • Letter: E
Question
Exercise 12-3
Flynn Company purchased 50 Rinehart Company 13%, 10-year, $1,800 bonds on January 1, 2015, for $90,000. The bonds pay interest semiannually on July 1 and January 1. On January 1, 2016, after receipt of interest, Flynn Company sold 30 of the bonds for $49,500.
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)
Thank you
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)
Thank you
Explanation / Answer
Journal entry ;
Date accounts & explanation debit credit jan 1,2015 Debt investment a/c 90000 Cash a/c 90000 (To record purchase of debt investment) July 1,2015 Cash a/c 5850 Interest revenue a/c (90000*13%*6/12) 5850 (To record interest received) Dec 31,2015 Interest receivable a/c 5850 Interest revenue a/c 5850 (To record earned interest) Jan 1,2016 Cash a/c 5850 Interest receivable a/c 5850 (To record receipt of interest) Jan 1,2016 Cash a/c 49500 Loss on sale of debt investment 4500 Debt investment a/c 54000 (To record sale of bonds)Related Questions
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