On January 2 Penny Company purchased 45 10% $1000 Mikel Company bonds for $45000 cash. Interest is payable annually on January 1. Journalize the entries to record the purchase of the bonds and the accrual of the annual interest on December 31.

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Final Answer :   Jan. 2 Debt Investments 45 , 000  Cash  45 , 000 Dec. 31 Interest Receivable  ( $ 45 , 000 × 10 % ) .  4 , 500  Interest Revenue 4 , 500 \begin{array}{llr}  	ext {  Jan. 2\quad Debt Investments}  & 45,000\\quad\quad\quad\quad 	ext { Cash }  & & 45,000\\ 	ext {Dec. 31\quad Interest Receivable   (\$ 45,000 	imes 10 \%)  .  }  & 4,500\ \quad\quad\quad\quad	ext {  Interest Revenue}  & & 4,500\\end{array}  Jan. 2 Debt Investments  Cash  Dec. 31 Interest Receivable  ( $45 , 000 × 10% ) .   Interest Revenue ​ 45 , 000 4 , 500 ​ 45 , 000 4 , 500 ​

On January 2 Penny Company purchased 45 10% $1000 Mikel Company bonds for $45000 cash. Interest is payable annually on January 1. Journalize the entries to record the purchase of the bonds and the accrual of the annual interest on December 31.

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