On January 1, 2017, Garzon purchased 6% bonds (held -to-maturity) issued by PBS Utilities at a cost of $40,000, which is their par value. The bonds pay interest semiannually on July 1 and January 1. For 2017 , prepare entries to record Garzon’s July 1 receipt of interest and its December 31 year-end interest accrual.
The required journal entries are :-
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Question & Answer: On January 1, 2017, Garzon purchased 6% bonds (held -to-maturity) issued by PBS Utilities at a cost of $40,000, which i…..
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|Jan.1 , 2017||HTM securities||40000|
|( to record purchase of securities )|
|July 1, 2017||Cash ( 40000 * 3 % )||1200|
|( to record receipt of interest )|
|Dec. 31, 2017||Interest receivable||1200|
|( to record interest accrual )|