Bond Investment Transactions

Journalize the entries to record the following selected bond investment transactions for Fly Company:

1. Purchased for cash $40,000 of Tyler Company 10% bonds at 100 plus accrued interest of $500.

2. Received the first semiannual interest.

3. Sold $30,000 of the bonds at 102 plus accrued interest of $110.

Question

Bond Investment Transactions

Journalize the entries to record the following selected bond investment transactions for Fly Company:

1. Purchased for cash $40,000 of Tyler Company 10% bonds at 100 plus accrued interest of $500.

2. Received the first semiannual interest.

3. Sold $30,000 of the bonds at 102 plus accrued interest of $110.

Accepted Answer

1. Investments—Tyler Company Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,000

Interest Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,500

2. Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000*

Interest Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500

Interest Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,500

*$40,000 × 10% × ½

3. Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,710*

Interest Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110

Gain on Sale of Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 600

Investments—Tyler Company Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,000

*Sale proceeds ($30,000 × 102%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $30,600

Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [latex]\underline{110} [/latex]

Total proceeds from sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [latex]\underline{\$ 30,710 } [/latex]

Question 15.1: Bond Investment Transactions Journalize the entries to recor...

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