Question

Ceiling Company purchased $1,300,000, 8 percent bonds issued by Melissa Company on January 1, 2011. The purchase price of the bonds was$1,350,000. Interest is payable semiannually each June 30 and December 31. Record the purchase of the bonds on January 1, 2011.

Answer 1

To record the purchase of the bonds on January 1, 2011, Ceiling Company would debit the Bonds Payable account and credit the Cash account.

Step-by-step explanation:

To record the purchase of the bonds on January 1, 2011, Ceiling Company would debit the Bonds Payable account and credit the Cash account. The Bonds Payable account represents the company's liability for the bonds, while the Cash account represents the cash paid for the bonds. The journal entry would be as follows:

Bonds Payable $1,350,000
Cash $1,350,000