On March 1, 2021, Navy Corporation used excess cash to purchase U.S. Treasury bonds for $103,000 plus accrued interest. The bonds were purchased at face value. The appropriate interest rate is 6%. Interest on these bonds is payable on January 1 and July 1 of each year. Navy's investment is accounted for as held-to-maturity. The fair value of the Treasury bonds is $104,000 at year-end. Required: Prepare the appropriate journal entries to record the transactions for the year, including any year-end adjustments. Record the purchase of U.S Treasury bonds for cash and accrued interest. Record the cash received for interest revenue and receivable. Record the entry for interest received.
On March 1, 2021, Navy Corporation used excess cash to purchase U.S. Treasury bonds for $103,000 plus accrued interest. The bonds were purchased at face value. The appropriate interest rate is 6%. Interest on these bonds is payable on January 1 and July 1 of each year. Navy's investment is accounted for as held-to-maturity. The fair value of the Treasury bonds is $104,000 at year-end. Required: Prepare the appropriate journal entries to record the transactions for the year, including any year-end adjustments. Record the purchase of U.S Treasury bonds for cash and accrued interest. Record the cash received for interest revenue and receivable. Record the entry for interest received.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
On March 1, 2021, Navy Corporation used excess cash to purchase U.S. Treasury bonds for $103,000 plus accrued interest. The bonds were purchased at face value. The appropriate interest rate is 6%. Interest on these bonds is payable on January 1 and July 1 of each year. Navy's investment is accounted for as held-to-maturity. The fair value of the Treasury bonds is $104,000 at year-end.
Required:
Prepare the appropriate
-
- Record the purchase of U.S Treasury bonds for cash and accrued interest.
-
- Record the cash received for interest revenue and receivable.
-
- Record the entry for interest received.
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