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-Evans Company Bonds, $104,500, and Interest Revenue, $500
B) debit Cash, $105,000; credit Investment-Evans Company Bonds, $100,000, and Gain on Sale of Investments, $5,000
C) debit Cash, $104,500, and Interest Receivable, $500; credit Investment-Evans Company Bonds, $100,000, Gain on Sale of Investments, $4,500, and Interest Revenue, $500
D) debit Cash, $105,000; credit Investment-Evans Company Bonds, $100,000, Gain on Sale of Investments, $4,500, and Interest Revenue, $500

The purchase price of the bonds was $100,000 and they were sold for $104,500 plus $500 in accrued interest. Therefore, the total proceeds received from the sale were $105,000. The journal entry to record the sale of the bonds would be to debit Cash for $105,000 and credit Investment-Evans Company Bonds for $100,000 to remove the bonds from the books. The difference between the proceeds ($105,000) and the cost of the investment ($100,000) is a gain on sale of investments, which should be credited for $4,500. Lastly, the accrued interest of $500 should be recognized as Interest Revenue, which should also be credited. Thus, the journal entry would be:
Debit: Cash $105,000
Credit: Investment-Evans Company Bonds $100,000
Credit: Gain on Sale of Investments $4,500
Credit: Interest Revenue $500