ACCT 2001 Lecture Notes - Lecture 27: Compound Interest
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For each of thebonds listed below, record the three requested journalentries. | ||||
Dates and descriptions are notrequired. | ||||
The Dorchester Companyinvested $100,000 in 5-year bonds. The bonds were purchased at parand bear interest at a rate of 8% per annum, payablesemiannually. | ||||
(a) | Prepare the journal entry to record the initialinvestment. | |||
(b) | Prepare the journal entry that Dorchester wouldrecord on each interest date. | |||
(c) | Prepare the journal entry that Dorchester wouldrecord at maturity of the bonds. | |||
a | Investment in bond | 100,000 | ||
Cash | 100,000 | |||
b | Cash | 4,000 | ||
Interest income | 4,000 | |||
c | Cash | 100,000 | ||
Investment in bond | 100,000 | |||
The Dorchester Companyinvested $100,000 of face amount of 5-year bonds. The bonds werepurchased at 103 and bear interest at a stated rate of 8% perannum, payable semiannually. | ||||
(a) | Prepare the journal entry to record the initialinvestment. | |||
(b) | Prepare the journal entry that Dorchester wouldrecord on each interest date. | |||
(c) | Prepare the journal entry that Dorchester wouldrecord at maturity of the bonds. | |||
a | ||||
b | ||||
c | ||||
The Dorchester Companyinvested $100,000 of face amount of 4-year bonds. The bonds werepurchased at 98 and bear interest at a stated rate of 8% per annum,payable semiannually. | ||||
(a) | Prepare the journal entry to record the initialinvestment. | |||
(b) | Prepare the journal entry that Dorchester wouldrecord on each interest date. | |||
(c) | Prepare the journal entry that Dorchester wouldrecord at maturity of the bonds. | |||