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ch10 - ACCT202 STUDY GUIDE BONDS This compendium of...

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ACCT202 STUDY GUIDE BONDS This compendium of Questions and Answers covers all the Liability and Bond concepts. SAMPLE THIS MATERIAL FOR STUDYING POINTS: Please review this material efficiently by scanning it and trying every third problem or so . This material is from an earlier version of our text. Material that highlights Bond Values and Plotting will be forwarded separately. Use the following information for questions 39–41. On January 1, 2008, Turner Company purchased at face value, a $1,000, 7% bond that pays interest on January 1 and July 1. Turner Company has a calendar year end. 39. The entry for the receipt of interest on July 1, 2008, is a. Cash .................................................................................... 35 Interest Revenue ......................................................... 35 b. Cash .................................................................................... 70 Interest Revenue ......................................................... 70 c. Interest Receivable .............................................................. 35 Interest Revenue ......................................................... 35 d. Interest Receivable .............................................................. 70 Interest Revenue ......................................................... 70 40. The adjusting entry on December 31, 2008, is 41. The entry for the receipt of interest on January 1, 2009 is
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Use the following information for questions 47–49. Pima Company acquires 50, 10%, 5 year, $1,000 Community bonds on January 1, 2008 for $51,250. This includes a brokerage commission of $1,250. 47. The journal entry to record this investment includes a debit to 48. Assume Community pays interest on January 1 and July 1, and the July 1 entry was done correctly. The journal entry at December 31, 2008 would include a credit to a. Interest Receivable for $2,500. b. Interest Revenue for $5,000. c. Accrued Expense for $5,000. d. Interest Revenue for $2,500. 49. If Pima sells all of its Community bonds for $52,000 and pays $1,500 in brokerage commissions, what gain or loss is recognized? 50. Steven Co. purchased 30, 6% Johnston Company bonds for $30,000 cash plus brokerage fees of $300. Interest is payable semiannually on July 1 and January 1. The entry to record the July 1 semiannual interest payment would include a 51. Steven Co. purchased 30, 6% Johnston Company bonds for $30,000 cash plus brokerage fees of $300. Interest is payable semiannually on July 1 and January 1. The entry to record the December 31 interest accrual would include a
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