Homework SourseQS 156 Debt securities transactions LO P2 On January 1 2017
QS 15-6 Debt securities transactions LO P2
On January 1, 2017, Garzon purchased 9.00% bonds issued by PBS Utilities at a cost of $53,600, which is their par value. The bonds pay interest semiannually on July 1 and January 1. For 2017, prepare entries to record Garzon\'s July 1 receipt of interest and its December 31 year-end interest accrual. (Do not round your intermediate calculations.)
QS 15-6 Debt securities transactions LO P2
On January 1, 2017, Garzon purchased 9.00% bonds issued by PBS Utilities at a cost of $53,600, which is their par value. The bonds pay interest semiannually on July 1 and January 1. For 2017, prepare entries to record Garzon\'s July 1 receipt of interest and its December 31 year-end interest accrual. (Do not round your intermediate calculations.)
Solution
Calculation of Interest: -
$53600 * 9% * 6/12 = $2412
Both the interest receipt and accrual are at the interval of 6 months.
| Date | Account Titles | Debit | Credit |
| July 1, 2017 | Cash | $2412 | |
| Interest Earned | $2412 | ||
| (For receipt of Interest on July 2017) | |||
| Dec 31, 2017 | Interest Receivable | $2412 | |
| Interest Earned | $2412 | ||
| (For accrual of interest on Dec 31 2017) |
