Question

Apr. 1 Purchased for cash $386,000 of Vasquez City 3% bonds at 100 plus accrued interest of $2,895. June 30 Received first semiannual interest payment. July 31 Sold $157,200 of the bonds at 96 plus accrued interest of $393. Aug. 1 Received face value of remaining bonds at their maturity. Required: Journalize the entries to record the above selected bond investment transactions for Beacon Trust. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered.

Answer 1

Here are the journal entries to record the above selected bond investment transactions for Beacon Trust:

The Journal Entries

April 1

Investments 386,000

Cash 388,895

To record the purchase of $386,000 of Vasquez City 3% bonds at 100 plus accrued interest of $2,895.

June 30

Cash 7,230

Interest Receivable 7,230

To record the receipt of the first semiannual interest payment on Vasquez City 3% bonds.

July 31

Cash 153,593

Investments 151,511

Interest Receivable 1,982

To record the sale of $157,200 of Vasquez City 3% bonds at 96 plus accrued interest of $393.

August 1

Cash 234,489

Investments 234,489

To record the receipt of the face value of the remaining Vasquez City 3% bonds at their maturity.