June 2012
Beginner
548 pages
15h 16m
English
book
Problem Solving Survival Guide to accompany Financial Accounting, 8th Edition
by Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
Content preview from Problem Solving Survival Guide to accompany Financial Accounting, 8th Edition
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EXERCISE 12-1
Purpose: (L.O. 2, 5) This exercise will illustrate how to record transactions related to an investment in bonds.
The Humpty Dumpty Company had the following transactions and events pertaining to an investment in bonds:
| April 1, 2014 | Acquired 100 King, Inc. 10%, 10-year, $1,000 bonds for $100,000. The bonds pay interest semiannually on April 1 and October 1; they mature on April 1, 2024. |
| Oct. 1, 2014 | Received interest on the bonds. |
| Dec. 31, 2014 | Adjusted the accounts in preparation of the financial statements. |
| April 1, 2015 | Received interest on the bonds. |
| July 31, 2015 | Sold all of the bonds for a price of $98,000 plus accrued interest. Incurred brokerage fees of $1,170. |
Instructions
Prepare all of the relevant journal entries to record the transactions and events listed above.
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