Prepare journal entries to record the following transactions involving the short
ID: 2523891 • Letter: P
Question
Prepare journal entries to record the following transactions involving the short-term securities investments of Krum Co., all of which occurred during year 2017.
On August 1, paid $76,000 cash to purchase Houtte's 12% debt securities ($76,000 principal), dated July 30, 2017, and maturing January 30, 2018 (categorized as available-for-sale securities).
On October 30, received a check from Houtte for 90 days' interest on the debt securities purchased in transaction a. (Use 360 days in a year. Do not round your intermediate calculations.)
Explanation / Answer
Journal Entries Date Account Title and explanation Debit Credit Aug, 01 2017 Investment - Available for Sale Securities $ 76,000 To Cash $ 76,000 (To Record the purchase of debt securities) Cash ($ 76,000 X 12% X 3/12) $ 2,280 October 30, 2017 To Interest Income $ 2,280 (To Record the interest income reciept from the available for sale securities)