Question

Bay Company acquires 60, 8%, 5 year, $1,000 Community bonds on January 1, 2014 for $60,000. The journal entry to record this investment includes a debit to

Answer 1

The options are missing, so I will just write down the complete journal entry that Bay Company should use to record this investment:

January 1, 2014, investment in Community bonds

Dr Investment in Community bonds 60,000

Cr Cash 60,000

Since no other transaction has taken place, all you need to record is the asset (investment account) and decrease the cash used to purchase the asset.

Answer 2

Answer: Interest revenue for $2400

Step-by-step explanation:

From the question, we are informed that Bay Company acquires 60, 8%, 5 year, $1,000 Community bonds on January 1, 2014 for $60,000. The journal entry to record this investment includes a debit for Interest revenue for $2400.

This was calculated in the following way:

= $60,000 × 8% × 1/2

= $60,000 × 0.08 × 0.5

= $2400 interest revenue