Question

Journalize the entries to record the following selected bond investment transactions for Starks Products:

For a compound transaction, if an amount box does not require an entry, leave it blank.

a. Purchased for cash $66,000 of Iceline, Inc. 7% bonds at 100 plus accrued interest of $770, paying interest semiannually.

	Investments-Iceline, Inc. Bonds
	Interest Receivable
	Cash

b. Received first semiannual interest payment.

	Cash
	Interest Receivable
	Interest Revenue

c. Sold $44,000 of the bonds at 103 plus accrued interest of $500.

	Cash
	Bonds Payable
	Interest Receivable
	Loss on Sale of Investments

Answer 1

a. Purchased for cash $66,000 of Iceline, Inc. 7% bonds at 100 plus accrued interest of $770, paying interest semiannually.

	Investments-Iceline, Inc. Bonds	66000
	Interest Receivable	770
	Cash		66770

b. Received first semiannual interest payment.

	Cash	2310
	Interest Receivable		770
	Interest Revenue (770*2)		1540

c. Sold $44,000 of the bonds at 103 plus accrued interest of $500.

	Cash (44000*1.03+500)	45820
	Bonds Payable		44000
	Interest Receivable		500
	Loss on sale of investment		1320