Question

ABC Company purchased an investment in bonds of XYZ Company 10% bonds at par value of $30,000. Interest is paid annually on the bonds. ABC Company's journal entry to record the interest should include a

Answer 1

the options are missing, but the journal entries to record both the purchase of the bonds and the coupon payments are:

The journal entry to record the purchase of the bonds should be

XX/202x, 10% bonds from XYZ Company purchased at par

Dr Investment in bonds: XYZ Company 30,000

Cr cash 30,000

When the coupon payments are received, the journal entry should be

XX/202y, coupon payment received from investment in bonds: XYZ Company

Dr Cash 3,000

Cr interest revenue 3,000