Asked by Carmen Stavole on Jun 11, 2024
Verified
On January 1 Hamm Company purchased as an investment a $1000 6% bond for $1050. The bond pays interest on January 1. What is the entry to record the interest accrual on December 31? a.
Interest Receivable 60 Interest Revenue 60\begin{array}{llr} \text { Interest Receivable } &60\\ \text { Interest Revenue } &&60\\\end{array} Interest Receivable Interest Revenue 6060
b.
Debt Investments 60 Interest Revenue 60\begin{array}{llr} \text {Debt Investments } &60\\ \text { Interest Revenue } &&60\\\end{array}Debt Investments Interest Revenue 6060
c.
Interest Receivable63 Interest Revenue63\begin{array}{llr} \text { Interest Receivable} &63\\ \text { Interest Revenue} &&63\\\end{array} Interest Receivable Interest Revenue6363
d.
Debt Investments 63 Interest Revenue 63\begin{array}{llr} \text { Debt Investments } &63\\ \text { Interest Revenue } &&63\\\end{array} Debt Investments Interest Revenue 6363
Interest Accrual
The recognition of interest earned or payable that has accumulated but not yet been recorded or paid.
Debt Investments
Investments made by purchasing bonds or other debt instruments, with the expectation of earning interest income and the return of principal.
- Familiarize yourself with the accounting processes and entries involved in acquiring, accruing interest, and selling debt investments.
Verified Answer
PJ
Learning Objectives
- Familiarize yourself with the accounting processes and entries involved in acquiring, accruing interest, and selling debt investments.
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