On January 1 2017 Brenner Company purchased at face value a $1000 8% bond that pays interest on January 1. Brenner Company has a calendar year end. The adjusting entry on December 31 2017 is
a. not required.
b.
$80\begin{array}{llr} \text { Cash } &80\\ \text { Interest Revenue } &&80\\\end{array}$

c.
$Revenue80\begin{array}{llr} \text { Interest Receivable } &80\\ \text { Interest Revenue} &&80\\\end{array}$

d.
$80\begin{array}{llr} \text { Interest Receivable } &80\\ \text { Debt Investments } &&80\\\end{array}$

Question

On January 1 2017 Brenner Company purchased at face value a $1000 8% bond that pays interest on January 1. Brenner Company has a calendar year end. The adjusting entry on December 31 2017 isa. not required.b.  Cash  80  Interest Revenue  80 \begin{array}{llr}  	ext { Cash }  & 80\ 	ext {  Interest Revenue }  & & 80\\end{array}  Cash   Interest Revenue  ​ 80 ​ 80 ​ c.  Interest Receivable  80  Interest Revenue 80 \begin{array}{llr}  	ext { Interest Receivable }  & 80\ 	ext {   Interest Revenue}  & & 80\\end{array}  Interest Receivable   Interest Revenue ​ 80 ​ 80 ​ d.  Interest Receivable  80  Debt Investments  80 \begin{array}{llr}  	ext { Interest Receivable }  & 80\ 	ext { Debt Investments }  & & 80\\end{array}  Interest Receivable   Debt Investments  ​ 80 ​ 80 ​

Danielle Smith · Accepted Answer

Final Answer : C, Explanation :  The adjusting entry is required to record the accrued interest revenue for the period from January 1 to December 31, 2017. Since the bond pays interest on January 1, 2017, the company has earned 8% of $1000, or $80, of interest revenue for the year. Therefore, the entry should be to debit Interest Receivable for $80 and credit Interest Revenue for $80.

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