On January 1 Wildcat Company purchased 93000 of 10 bonds at

On January 1 Wildcat Company purchased $93,000 of 10% bonds at face value. The bonds are to be held to maturity. The bonds pay interest semiannually on January 1 and July 1. Required: (1.) Prepare the appropriate journal entry to record the acquisition of the bonds. (2.) Record the first two interest payments (ignore year-end accruals).

Solution

1) Investment in Bonds debit $ 93000

Cash credit $ 93000

2) July 1 Cash debit $ 4650

Interest credit $ 4650

31/12/15 Cash debit $ 4650

Interest credit $ 4650