ing 13e ACC 171272 Gradebosk ORION Downloadable eTextbosk UR

ing 13e (ACC 171/272 Gradebosk ORION Downloadable eTextbosk URCESExercise 16-2 0,000 cash Interest is peyable annually on January 1, 2017 2 Accrued interest on Leeds Co. bonds on December 31, 2017 Received interest on Leeds Co. bands on enuary 1, 20 4. Scid 30Leeds Co. bonds for S33,000 on January 12018. s entered. Do ot indentmanwally. f of entry is i places, eg. 5,25.) Titles and Q WE K. V BNM option command

Solution

Date

Account Titles and Explanation

Debit

Credit

2017

January 1

Investment in Bonds

$50000

     Cash

$50000

(For recording purchase of bonds)

December 31

Interest Receivable

$4500

     Interest Revenue

$4500

(For recording interest revenue on bonds)

2018

January 1

Cash

$4500

     Interest Receivable

$4500

(For recording interest revenue on bonds)

January 1

Cash

$33000

     Investment in Bonds

$30000

     Gain on sale of Bonds

$3000

(For recording sale of 30 bonds for $33000)

Working Note;

1. Interest on bonds is calculated as follow;

($50000 * .09) = $4500

2. Gain on sale of bonds is calculated as follow;

($33000 – $30000) = $3000

Date

Account Titles and Explanation

Debit

Credit

January 1

Common Stock

$152000

     Cash

$152000

(For recording purchase of 2500 shares)

July 1

Cash

$7500

     Dividend Income

$7500

(For recording receipt of dividend income on 2500 shares)

December 1

Cash

$32000

     Common Stock

$30400

     Gain on Sale of Common Stock

$1600

(For recording sale of 500 common stock)

December 31

Cash

$6000

     Dividend Income

$6000

(For recording receipt of dividend income on 2000 shares)

Working Note;

1. Dividend income on common stock is calculated as follow;

For July 1;

(2500 shares * $3) = $7500

For December 31;

(2000 shares * $3) = $6000

2. Gain on sale of shares is calculated as follow;

($32000 – $30400) = $1600

Date	Account Titles and Explanation	Debit	Credit
2017
January 1	Investment in Bonds	$50000
	Cash		$50000
	(For recording purchase of bonds)
December 31	Interest Receivable	$4500
	Interest Revenue		$4500
	(For recording interest revenue on bonds)
2018
January 1	Cash	$4500
	Interest Receivable		$4500
	(For recording interest revenue on bonds)
January 1	Cash	$33000
	Investment in Bonds		$30000
	Gain on sale of Bonds		$3000
	(For recording sale of 30 bonds for $33000)