Question :
51. On June 1, $50,000 of treasury bonds were purchased between : 1239341
51. On June 1, $50,000 of treasury bonds were purchased between interest dates. The broker commission was $500. The bonds pay interest at 12%, which is paid semiannually on January 1 and July 1. What is the total cost to be debited to the Investment – Treasury Bonds account?
A. $50,000
B. $50,500
C. $49,500
D. $53,000
52. On June 1, $40,000 of treasury bonds were purchased between interest dates. The broker commission was $600. The bonds pay interest at 12%, which is paid semiannually on January 1 and July 1. How much interest revenue will be recorded on July 1?
A. $400
B. $406
C. $2,000
D. $2,400
53. Interest revenue on bonds is reported
A. as an addition to the Investment in Bonds account
B. as part of Comprehensive Income but not as part of Net Income.
C. as part of other income
D. as part of operating income
54. 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 semi-annually. The journal entry to record the purchase would be:
A. Debit: Investment in Bonds $101,500; Credit: Cash $101,500
B. Debit: Investment in Bonds $100,000; Credit: Interest Revenue $1,500 and Cash $98,500
C. Debit: Investment in Bonds $100,000 and Interest Receivable $1,500; Credit: Cash $101,500
D. Investment in Bonds $100,000; Credit: Cash $100,000
55. 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 semi-annually. The journal entry to record the receipt of interest on the next interest payment date would be:
A. Debit: Cash $4,000; Credit: Interest Revenue $4,000
B. Debit: Cash $4,000; Credit: Interest Receivable $4,000
C. Debit: Cash $4,000; Credit: Interest Receivable $1,500 and Interest Revenue $2,500
D. Debit: Cash $2,500; Credit: Interest Revenue $2,500
56. Ruben Company purchased $100,000 of Evans Company bonds at 100. Ruben later sold the bonds at $104,500 plus $500 in accrued interest. The journal entry to record the sale of the bonds would be:
A. Debit: Cash $105,000; Credit: Investment in Bonds $104,500 and Interest Revenue $500
B. Debit: Cash $105,000; Credit: Investment in Bonds $100,000 and Gain on Sale of Investments $5,000
C. Debit: Cash $104,500 and Interest Receivable $500; Credit: Investment in Bonds $100,000, Gain on Sale of Investments $4,500 and Interest Revenue $500
D. Debit: Cash $105,000; Credit: Investment in Bonds $100,000; Gain on Sale of Investments $4,500 and Interest Revenue $500
57. Jarvis Corporation makes an investment in 100 shares of Saxton Company’s common stock. The stock is purchased for $45 a share plus brokerage fees of $280. The entry for the purchase is:
A. Cash 4,500
Stock Investments – Saxton Company 4,500
B. Stock Investments – Saxton Company 4,780
Cash 4,780
C. Stock Investments – Saxton Company 4,500
Brokerage Fee Expense 280
Cash 4,780
D. Stock Investments – Saxton Company 4,500
Cash 4,500
58. Jacks Corporation purchases $200,000 bonds plus accrued interest for 2 months of $2,000 from Kennedy Company on March 1. The bonds have an annual interest rate of 6% payable on June 30 and December 31. The entry to record the purchase of the bonds would include:
A. Interest Receivable debit $2,000
B. Investment in Bonds debit $202,000.
C. Cash debit $200,000
D. Interest Revenue credit $2,000.
59. On April 1, 2011, Albert Company purchased $50,000 of Tetter Company’s 12% bonds at 100 plus accrued interest of $2,000. On June 30, 2011, Albert received its first semiannual interest. On February 1, 2012, Albert sold $40,000 of the bonds at 103 plus accrued interest. The journal entry Albert will record on April 1, 2011 for the purchase of the bonds will include:
A. a credit to Interest Payable for $2,000.
B. a debit to Investments – Tetter Company for $52,000.
C. a debit for Cash of $50,000.
D. a debit to Investments – Tetter Company for $50,000.
60. The journal entry Stanton will record on June 30, 2014, will include:
A. a credit to Interest Revenue for $2,400.
B. a debit to Cash for $3,600.
C. a credit to Cash for $2,400.
D. a credit to Interest Receivable for $1,200.
