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Question
On April 1, Alliance Company purchased $50,000 of Tetter Company’s 12% bonds at 100 plus accrued interest of $2,000. On June 30, Alliance received its first semiannual interest. On February 1, Alliance sold $40,000 of the bonds at 103 plus accrued interest. The journal entry Alliance will record on April 1 for the purchase of the bonds will include a
a. credit to Interest Payable for $2,000
b. debit to Investments—Tetter Company Bonds for $52,000
c. debit to Cash for $50,000
d. debit to Investments—Tetter Company Bonds for $50,000
Answer
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