Entries for bond (held-to-maturity) investments The following bond investment transactions were completed by Starks Company: Jan. 31 Purchased 39, $1,000 government bonds at 100 plus accrued interest of $195 (1 month). The bonds pay 6% annual interest on July 1 and January 1. July 1 Received semiannual interest on bond investment. Aug. 30 Sold 15, $1,000 bonds at 97 plus $150 accrued interest (2 months). a. Journalize the entries for these transactions. Assume a 360-day year. Do not round interim calculations. Round final answers to nearest dollar. If an amount box does not require an entry, leave it blank. Jan. 31 Investments-Government Bonds Interest Receivable Cash July 1 Cash Interest Receivable Interest Revenue Aug. 30 Cash Sale of Investments Interest Revenue InvestmentsInvestments-Government Bonds b. Journalize the December 31 adjusting entry for semiannual interest earned on the bonds. Assume a 360-day year. Do not round interim calculations. Round final answers to nearest dollar. If an amount box does not require an entry, leave it blank. Dec. 31 Interest Receivable Interest Revenue c. Journalize the receipt of $24,000 at the bonds’ maturity on July 1. If an amount box does not require an entry, leave it blank. July. 1 Cash Investments-Government Bonds.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Entries for bond (held-to-maturity) investments

The following bond investment transactions were completed by Starks Company:

Jan. 31	Purchased 39, $1,000 government bonds at 100 plus accrued interest of $195 (1 month). The bonds pay 6% annual interest on July 1 and January 1.
July 1	Received semiannual interest on bond investment.
Aug. 30	Sold 15, $1,000 bonds at 97 plus $150 accrued interest (2 months).

a. Journalize the entries for these transactions. Assume a 360-day year. Do not round interim calculations. Round final answers to nearest dollar. If an amount box does not require an entry, leave it blank.

Jan. 31	Investments-Government Bonds
	Interest Receivable
	Cash
July 1	Cash
	Interest Receivable
	Interest Revenue
Aug. 30	Cash
	Sale of Investments
	Interest Revenue
	InvestmentsInvestments-Government Bonds

b. Journalize the December 31 adjusting entry for semiannual interest earned on the bonds. Assume a 360-day year. Do not round interim calculations. Round final answers to nearest dollar. If an amount box does not require an entry, leave it blank.

Dec. 31	Interest Receivable
	Interest Revenue

c. Journalize the receipt of $24,000 at the bonds’ maturity on July 1. If an amount box does not require an entry, leave it blank.

July. 1	Cash
	Investments-Government Bonds.

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