Financial Accounting
14th Edition
ISBN: 9781305088436
Author: Carl Warren, Jim Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Chapter 15, Problem 3E
To determine
Journalize the bond investment transactions in the books of Corporation B.
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Bocelli Co. purchased $120,000 of 6%, 20-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 99 plus $150 accrued interest less a $100 brokerage commission.
Provide journal entries for the following (refer to the Chart of Accounts for exact wording of account titles):
a.
The purchase of the bonds on May 11 plus 40 days of accrued interest; assume a 360-day year.
b.
Semiannual interest on October 1.
c.
Sale of the bonds on October 31.
d.
Adjusting entry for accrued interest of $1,365 on December 31, Year 1.
Bocelli Co. purchased $120,000 of 6%, 20-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 99 plus $150 accrued interest less a $100 brokerage commission.Provide journal entries for the following:a. The purchase of the bonds on May 11 plus 40 days of accrued interest.b. Semiannual interest on October 1.c. Sale of the bonds on October 31.d. Adjusting entry for accrued interest of $1,365 on December 31, Year 1.
Gillooly Co. purchased $360,000 of 6%, 20-year Lumpkin 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, Gillooly Co. sold $90,000 of the Lumpkin County bonds at 98 plus $450 accrued interest less a $200 brokerage commission.
Journalize the entries to record the following: Do not round interim calculations. Round final answers to nearest dollar. If an amount box does not require an entry, leave it blank. Assume a 360-day year.
Question Content Area
a. The purchase of the bonds on May 11 plus 40 days of accrued interest.
Year 1 May 11
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Question Content Area
b. Semiannual interest on October 1.
Year 1 Oct. 1
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Chapter 15 Solutions
Financial Accounting
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Ch. 15.MJ - IFRS Activity 1
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