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Journalize the entries to record the following selected bond investment transactions for Jennings products: a
Journalize the entries to record the following selected bond investment transactions for Jennings products:
a. Purchased for cash $40,000 of Tech Grove, Inc. 6% bonds at 100 plus accrued interest of $850.
b. Received first semiannual interest.
c. Sold $15,000 of the bonds at 102 plus accrued interest of $150.
Expert Solution
a. Investments x Tech Grove, Inc. Bonds........................... 40,000
Interest Receivable............................................................... 850
Cash.................................................................................... 40,850
b. Cash................................................................................. 1,200*
Interest Receivable............................................................. 850
Interest Revenue................................................................. 350
*$40,000 × 6% × ½
c. Cash............................................................................... 15,450*
Interest Revenue................................................................. 150
Gain on Sale of Investments............................................... 300
Investments x Tech Grove, Inc. Bonds.............................. 15,000
*Sale proceeds ($15,000 × 102%)................................. $15,300
Accrued interest.................................................................. 150
Total proceeds from sale.............................................. $15,450
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