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Question
Ruben Company purchased $100,000 of Evans Company bonds at 100 plus $1,500 in accrued interest. The bond interest rate is 8% and interest is paid semiannually. The journal entry for the purchase would be
a. debit Investments—Evans Company Bonds, $101,500; credit Cash, $101,500
b. debit Investments—Evans Company Bonds, $100,000; credit Interest Revenue, $1,500, and Cash, $98,500
c. debit Investments—Evans Company Bonds, $100,000, and Interest Receivable $1,500; credit Cash, $101,500
d. debit Investments—Evans Company Bonds, $100,000; credit Cash, $100,000
Answer
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