Question

In: Accounting

Journalize the entries to record the following selected bond investment transactions for Southwest Bank: Refer to...

Journalize the entries to record the following selected bond investment transactions for Southwest Bank: Refer to the Chart of Accounts for exact wording of account titles.

Apr. 1 Purchased $400,000 of Daytona Beach 4.5% bonds at 100 plus accrued interest of $4,500.
July 1 Received the first semiannual interest.
Sept. 1

Sold $250,000 of the bonds at 97, plus accrued interest of $1,875.

CHART OF ACCOUNTS
Southwest Bank
General Ledger
ASSETS
110 Cash
120 Accounts Receivable
121 Allowance for Doubtful Accounts
131 Notes Receivable
132 Interest Receivable
141 Merchandise Inventory
151 Supplies
152 Prepaid Insurance
161 Investments-Daytona Beach Bonds
165 Valuation Allowance for Trading Investments
166 Valuation Allowance for Available-for-Sale Investments
181 Land
191 Equipment
192 Accumulated Depreciation-Equipment
LIABILITIES
210 Accounts Payable
221 Notes Payable
231 Interest Payable
241 Salaries Payable
EQUITY
311 Common Stock
312 Paid-In Capital in Excess of Par-Common Stock
321 Preferred Stock
322 Paid-In Capital in Excess of Par-Preferred Stock
331 Treasury Stock
332 Paid-In Capital from Sale of Treasury Stock
340 Retained Earnings
351 Cash Dividends
352 Unrealized Gain (Loss) on Available-for-Sale Investments
353 Stock Dividends
390

Income Summary


Journalize each of the entries to record the selected bond investment transactions for Southwest Bank. Refer to the Chart of Accounts for exact wording of account titles.

PAGE 1

JOURNAL

DATE DESCRIPTION POST. REF. DEBIT CREDIT

1

2

3

4

5

6

7

8

9

10

REVENUE
410 Sales
611 Interest Revenue
612 Dividend Revenue
631 Gain on Sale of Investments
641 Unrealized Gain on Trading Investments
EXPENSES
511 Cost of Merchandise Sold
512 Bad Debt Expense
522 Salaries Expense
531 Advertising Expense
532 Rent Expense
533 Insurance Expense
534 Supplies Expense
561 Depreciation Expense-Equipment
590 Miscellaneous Expense
710 Interest Expense
731 Loss on Sale of Investments
741 Unrealized Loss on Trading

Solutions

Expert Solution

Date

Description

Post Ref.

Debit

Credit

1-Apr

Investments-Daytona Beach Bonds

161

$ 400,000.00

Interest Revenue

611

$      4,500.00

                Cash

110

$ 404,500.00

(bonds purchased and interest paid on bonds till date)

1-Jul

Cash

110

$      9,000.00

          Interest Revenue

611

$      9,000.00

(Interest on Bonds Receiced)

1-Sep

Cash

110

$ 244,375.00

Loss on Sale of Investments

731

$      7,500.00

                Investments-Daytona Beach Bonds

161

$ 250,000.00

                Interest Revenue

611

$      1,875.00

(Bonds sold and loss on sale recorded)

$ 665,375.00

$ 665,375.00


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