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 80 896, $1,800 Leeds Co. bonds for $144,000 cash. Interest is payable annually on January 1, 2017. Accrued interest on Leeds Co. bonds on December 31, 2017. Recelved interest on Leeds Co. bonds on January 1, 2018. Sold 48 Leeds Co. bonds for $97,920 on January 1, 2018. 1. 2. 3. 4. 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. Date Account Titles and Explanation Debit Credit 1. 2. 4

Explanation / Answer

Answer

Date

Accounts Title

Debit

Credit

Working

01-01-2017

8% Leeds Co Bonds

144000

[$1800 x 80 bonds]

Cash/Bank

144000

(Bonds purchased at $1800 per bond)

31-12-2017

Accrued Interest

11520

[144000 x 8%]

Interest Income

11520

(Annual Interest accrued)

01-01-2018

Cash/Bank

11520

Accrued Interest

11520

(Accrued interest actually received)

01-01-2018

Cash/Bank

97920

[Actually received]

Gain on sale of Investment

11520

[Balancing figure]

8% Leeds Co Bonds

86400

[48 x $1800]

(Bonds sold at a profit)

Date

Accounts Title

Debit

Credit

Working

01-01-2017

8% Leeds Co Bonds

144000

[$1800 x 80 bonds]

Cash/Bank

144000

(Bonds purchased at $1800 per bond)

31-12-2017

Accrued Interest

11520

[144000 x 8%]

Interest Income

11520

(Annual Interest accrued)

01-01-2018

Cash/Bank

11520

Accrued Interest

11520

(Accrued interest actually received)

01-01-2018

Cash/Bank

97920

[Actually received]

Gain on sale of Investment

11520

[Balancing figure]

8% Leeds Co Bonds

86400

[48 x $1800]

(Bonds sold at a profit)

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