Bond investment: Bond investments are debt securities which pay a fixed interest revenue to the investor. Journal entry : Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically. Debit and credit rules: Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts. Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts. To journalize: The bond investment transactions of H Trust

Question

Journalize the entries to record the following selected bond investment transactions for Hall Trust (refer to the Chart of Accounts for exact wording of account titles): Apr. 1 Purchased for cash $388,000 of Medina City 4% bonds at 100 plus accrued interest of $3,880, paying interest semiannually. June 30 Received first semiannual interest payment. July 31 Sold $154,800 of the bonds at 96 plus accrued interest of $516.

Answer 1

Question

Chapter 15, Problem 15.1APE

(a)

To determine

Bond investment: Bond investments are debt securities which pay a fixed interest revenue to the investor.

Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Debit and credit rules:

Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts.

Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.

To journalize: The bond investment transactions of H Trust

(b)

To determine

To journalize: Prepare journal entry to record the interest revenue received.

(c)

To determine

To journalize: Prepare journal entry for $120,000 bonds of M City sold at 98%, with an accrued interest of $600.

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