Question

Jenek Corporation had the following transactions pertaining to debt investments.

1. Purchased 25, 9%, $1,600 Leeds Co. bonds for $40,000 cash. Interest is payable annually on January 1, 2017.
2. Accrued interest on Leeds Co. bonds on December 31, 2017.
3. Received interest on Leeds Co. bonds on January 1, 2018.
4. Sold 15 Leeds Co. bonds for $27,200 on January 1, 2018.
Journalize the transactions.

Answer 1

Date Account title and explanation Debit($) Credit($)

Jan 1, 2017 Investment in bonds of Leeds Co. 40,000

Cash 40,000

Dec 31,2017 Interest receivable 3600

Interest revenue 3600

Jan 1,2018 Cash 3600

Interest receivable 3600

Jan 1, 2018 Cash 27,200