Question

Leonard Technologies invests $62,000 to acquire $62,000 face​ value, 10​%, five - year corporate bonds on December​ 31, 2014. The bonds will mature on December​ 31, 2019. The bonds pay interest semi-annually on December 31 and June 30 every year until maturity. Assume Leonard Technologies uses a calendar year. Based on the information​ provided, which of the following will be included in the journal entry for the transaction on December​ 31, 2018?

a. a debit to Interest Revenue for $5,400.
b. a credit to Interest Revenue for $2,700.
c. a debit to Interest Revenue for $2,700.
d. a credit to Interest Revenue for $5,400.

Answer 1

Credit to Interest Revenue for $3,100

Step-by-step explanation:

Date Account Titles and Explanation Debit Credit

Dec 31. Cash ($62,000 * 10% * 6/12) $3,100

Interest Revenue $3,100

(To record interest revenue for the semi

annual period ended December 31, 2018)