Bocelli Co. purchased $24,000 of 5%, 10-year Sanz County bonds on May 11, Year 1, directly from the county, at their face amount plus accrued interest. The bonds pay semiannual interest on April 1 and October 1. On October 31, Year 1, Bocelli Co. sold $12,000 of the Sanz County bonds at 101 plus $50 accrued interest less a $135 brokerage commission. Do not round interim calculations. Round final answers to nearest dollar. For a compound transaction, if an amount box does not require an entry, leave it blank. Assume a 360-day year. a.  Provide the journal entry for the purchase of the bonds on May 11 plus 72 days of accrued interest. Year 1 May 11   fill in the blank cc1015feb02d00e_2 fill in the blank cc1015feb02d00e_3     fill in the blank cc1015feb02d00e_5 fill in the blank cc1015feb02d00e_6     fill in the blank cc1015feb02d00e_8 fill in the blank cc1015feb02d00e_9 b.  Provide the journal entry for the semiannual interest on October 1. Year 1 Oct. 1   fill in the blank d9f0c00a9fc5f87_2 fill in the blank d9f0c00a9fc5f87_3     fill in the blank d9f0c00a9fc5f87_5 fill in the blank d9f0c00a9fc5f87_6     fill in the blank d9f0c00a9fc5f87_8 fill in the blank d9f0c00a9fc5f87_9 c.  Provide the journal entry for the sale of the bonds on October 31. Year 1 Oct. 31   fill in the blank 4e2c7900b07902b_2 fill in the blank 4e2c7900b07902b_3     fill in the blank 4e2c7900b07902b_5 fill in the blank 4e2c7900b07902b_6     fill in the blank 4e2c7900b07902b_8 fill in the blank 4e2c7900b07902b_9     fill in the blank 4e2c7900b07902b_11 fill in the blank 4e2c7900b07902b_12 d.  Provide the adjusting entry for accrued interest of $100 on December 31, Year 1. Year 1 Dec. 31   fill in the blank d50f8900afb3ff8_2         fill in the blank d50f8900afb3ff8_4

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Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.