Question

Flynn Company purchased 60 Rinehart Company 11% 10 year $1500 bonds on January 1 2014 for $90000. The bonds pay interest semiannually on July 1 and January 1. On January 1 2015 after receipt of interest Flynn Company sold 36 of the bonds for $49500. Prepare the journal entries to record the transactions described above.

Answer 1

Journal Entries In Books Of Flynn Company

Date Particulars    Debit Amount($)       Credit Amount($)

1.jan.2014 11% Bonds Account Dr 90000

To Bank 90000

(Being 60 , 11% bonds purchased of Rinehart Company)

1.July.2014 Bank Account Dr 4950

To Interest Recieved Account 4950

(Being interest Recieved semi annually

90000 * 11%*6/12 = 4950$)

1.july.2014 Interest recieved Account Dr 4950

To Profit and Loss Account 4950

(Being Interest Recieved transfered to

Profit and loss Account)

1. Jan . 2015    Bank Account Dr 4950

To Interest Recieved Account 4950

(Being interest Recieved semi annually

90000 * 11%*6/12 = 4950$)

1.Jan . 2015 Interest recieved A/c Dr 4950

To Profit and Loss Account 4950

(Being Interest Recieved transfered to

Profit and loss Account)

1.jan.2015 Bank Account Dr 49500

Profit and Loss Account Dr 4500

To 11% Bonds account    54000

(Being 36 , 11 % Bonds Valuing

$54000(1500$*36) Sold for 49500$

at a loss of 4500$ and amount being transfered

to profit and loss Account as a loss)