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Purchase and Sale of Bonds

Starship Enterprises enters into the following transactions during 2014 and 2015:

2014

Jan. 1: Purchased $100,000 face value of Northern Lights Inc. bonds at face value.

The newly issued bonds have an interest rate of 8% paid semiannually on June 30 and December 31. The bonds mature in five years.

June 30: Received interest on the Northern Lights Inc. bonds.

Dec. 31: Received interest on the Northern Lights Inc. bonds.

2015

Jan. 1: Sold the Northern Lights Inc. bonds for $102,000.

Required:

1. Prepare all necessary journal entries on Starship's records to account for its investment in the Northern Lights bonds.

2. Why was Starship able to sell its Northern Lights bonds for $102,000?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91625023

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