On January 1, 2016, Hyde Corporation purchased bonds with a face value of $300,0
ID: 2462966 • Letter: O
Question
On January 1, 2016, Hyde Corporation purchased bonds with a face value of $300,000 for $308,373.53. The bonds are due June 30, 2019, carry a 13% stated interest rate, and were purchased to yield 12%. Interest is payable semiannually on June 30 and December 31. On March 31, 2017, in contemplation of a major acquisition, the company sold one-half the bonds for $159,500 including accrued interest; the remainder were held until maturity.
Required:
Prepare the journal entries to record the purchase of the bonds, each interest payment, the partial sale of the investment on March 31, 2017, and the retirement of the bond issue on June 30, 2019.Explanation / Answer
Date Account Titles Debit Credit $ $ January 1 2016 Investment in bonds 308,373.53 Cash 308,373.53 June 30 2016 Cash 19,500 Interest revenue 18,502.41 Investment in bonds 997.59 December 31 2016 Cash 19,500 Interest revenue 18,442.56 Investment in bonds 1057.44 March 31 2017 Accrued interest 9,750 Interest revenue 9,189.56 Investment in bonds 560.44 Cash 159,500 Loss on sale of bonds 3,129.03 Investment in bonds 152,879.03 Accrued Interest 9,750 June 30 2017 Cash 150,000 Investment in bonds 150,000