Entries for Investment in Bonds, Interest, and Sale of Bonds Bocelli Co. purchased $84,000 of 7%, 12-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 $30,000 of the Sanz County bonds at 102 plus $175 accrued interest less a $665 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 2f0f5d043fb3074_2 fill in the blank 2f0f5d043fb3074_3     fill in the blank 2f0f5d043fb3074_5 fill in the blank 2f0f5d043fb3074_6     fill in the blank 2f0f5d043fb3074_8 fill in the blank 2f0f5d043fb3074_9 b.  Provide the journal entry for the semiannual interest on October 1. Year 1 Oct. 1   fill in the blank e1e3e701f07605b_2 fill in the blank e1e3e701f07605b_3     fill in the blank e1e3e701f07605b_5 fill in the blank e1e3e701f07605b_6     fill in the blank e1e3e701f07605b_8 fill in the blank e1e3e701f07605b_9 c.  Provide the journal entry for the sale of the bonds on October 31. Year 1 Oct. 31   fill in the blank 5dfa91fd4fbb046_2 fill in the blank 5dfa91fd4fbb046_3     fill in the blank 5dfa91fd4fbb046_5 fill in the blank 5dfa91fd4fbb046_6     fill in the blank 5dfa91fd4fbb046_8 fill in the blank 5dfa91fd4fbb046_9     fill in the blank 5dfa91fd4fbb046_11 fill in the blank 5dfa91fd4fbb046_12 d.  Provide the adjusting entry for accrued interest of $630 on December 31, Year 1. Year 1 Dec. 31   fill in the blank e2a6df01d05d058_2

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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.