On January 1, 2020, Pearl Company purchased at par 8% bonds having a maturity value of $270,000. They are dated January 1, 2020, and mature January 1, 2025, with interest received on January 1 of each year. The bonds are classified in the held-to-maturity category.(a) Prepare the journal entry at the date of the bond purchase.(b) Prepare the journal entry to record the interest revenue on December 31, 2020.(c) Prepare the journal entry to record the interest received on January 1, 2021. This image is a template for accounting entries commonly used to record financial transactions in a journal. It consists of three main sections for recording details for each entry:- **Account Titles and Explanation:** This section provides space to write the account titles and explanations. The first entry is labeled with "(a)", the second with "(b)", and the third with "(c)".- **Debit Column:** Adjacent to the account titles, this column is designated for debit amounts. Each row corresponds to an entry where a debit amount is recorded.- **Credit Column:** This column is for entering credit amounts corresponding to each account title.**Additional Instructions:**- Credit account titles are automatically indented when an amount is entered. Users are advised not to manually indent.- If no entry is required, users should select "No Entry" for the account titles and enter "0" for the amounts.This structured format aids in maintaining organized and accurate financial records.

Journal Entry: It involves keeping the records of all financial transactions of an entity. which shows the company debit or credit balance. It consists of several recordings.A) Date Particulars Debit Credit 01-01-2020 Investment in bond $ 2,70,000 To Cash $ 2,70,000 B) Date Particulars Debit Credit 12-31-2020 Interest Receivable $ 21,600 To Interest Revenue $ 21,600 Working:- Interest Receivable & Received 12-31-2020 = $270,000 x 8% = $21,600 01-01-2021 = $270,000 x 8% = $21,600 C) Date Particulars Debit Credit 01-01-2021 Cash $ 21,600 To Interest Receivable $ 21,600

Answered: On January 1, 2020, Pearl Company…

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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On January 1, 2020, Pearl Company purchased at par 8% bonds having a maturity value of $270,000. They are dated January 1, 2020, and mature January 1, 2025, with interest received on January 1 of each year. The bonds are classified in the held-to-maturity category.

(a)		Prepare the journal entry at the date of the bond purchase.
(b)		Prepare the journal entry to record the interest revenue on December 31, 2020.
(c)		Prepare the journal entry to record the interest received on January 1, 2021.

This image is a template for accounting entries commonly used to record financial transactions in a journal. It consists of three main sections for recording details for each entry:

- **Account Titles and Explanation:** This section provides space to write the account titles and explanations. The first entry is labeled with "(a)", the second with "(b)", and the third with "(c)".

- **Debit Column:** Adjacent to the account titles, this column is designated for debit amounts. Each row corresponds to an entry where a debit amount is recorded.

- **Credit Column:** This column is for entering credit amounts corresponding to each account title.

**Additional Instructions:**
- Credit account titles are automatically indented when an amount is entered. Users are advised not to manually indent.
- If no entry is required, users should select "No Entry" for the account titles and enter "0" for the amounts.

This structured format aids in maintaining organized and accurate financial records.

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