Patterson Corp. carries an account in its general ledger called Investments, whi
ID: 2350402 • Letter: P
Question
Patterson Corp. carries an account in its general ledger called Investments, which contained debits for investment purchases, and no credits, with the following descriptions.**Feb. 1, 2010 Shazz Company common stock, $100 par, 200 shares- $37,400
**April 1, 2010- U.S. government bonds, 11%, due April 1, 2020, interest payable April 1 and October 1, 110 bonds of $1,000 par each- $110,000
**July 1, 2010- McDaniel Company 12% bonds, par $50,000, dated March 1, 2010 purchased at 104 plus accrued interest, interest payable annually on March 1, due March 1, 2030- $54,000
INSTRUCTIONS:
The U.S. government bonds were sold on July 1,2011, for $119,200 plus accrued interest. Give the proper entry. **Accounts are Cash (debit), and there are 3 accounts to be debited with one of them being Interest Revenue.
Explanation / Answer
Cash ($119,200 + $3,025) ............................................ 122,225
Debt Investments (Available-for-Sale) ...........................-------------------110,000
Interest Revenue($110,000 X .11 X 3/12) ............................................... 3,025
Gain on Sale of Investments ............................................ 9,200