Question

On August 1, 2021, Dambro Company acquired 1,200, $1,000, 9% bonds at 97 plus accrued interest. The bonds were dated May 1, 2018, and mature on April 30, 2027, with interest paid each October 31 and April 30. The bonds will be added to Dambro's available-for-sale portfolio. The preferred entry to record the purchase of the bonds on

Answer 1

Answer:

Dr Debt Investments 1,164,000

Dr Interest Revenue 27,000

Cr Cash 1,191,000

Step-by-step explanation:

Preparation of The preferred entry to record the purchase of the bonds

Based on the information given the preferred journal entry to record the purchase of the bonds will be :

Dr Debt Investments 1,164,000

(1,200 × $1,000 × .97)

Dr Interest Revenue 27,000

($1,200,000 × .09 × 3/12)

(04/31 – 08/01)

Cr Cash 1,191,000

($1,164,000 + $27,000)