Asked by Mariana Rivera on Jul 15, 2024
Verified
The journal entry Pierce will record on June 30 will include a
A) credit to Interest Revenue for $2,400
B) debit to Cash for $3,600
C) credit to Cash for $2,400
D) credit to Interest Receivable for $1,200
Accrued Interest
Interest that has been incurred but not yet paid.
Semiannual Interest
Interest calculated or paid twice a year, commonly associated with bonds or loan agreements.
Interest Receivable
Interest Receivable is the amount of interest income that has been earned but not yet received in cash, representing an asset on the balance sheet.
- Understand the accounting practices for bond investments, encompassing acquisition, recognition of interest income, and disposal.
- Comprehend how dividends and interest revenue are treated in the context of investment accounting.
Verified Answer
NC
Nelcy CaballeroJul 17, 2024
Final Answer :
B
Explanation :
The journal entry on June 30 will include a debit to Cash for $3,600, which represents the semiannual interest payment (6 months) on the $60,000 of bonds at a 12% annual interest rate ($60,000 * 12% * 6/12 = $3,600).
Learning Objectives
- Understand the accounting practices for bond investments, encompassing acquisition, recognition of interest income, and disposal.
- Comprehend how dividends and interest revenue are treated in the context of investment accounting.
Related questions
The Journal Entry Pierce Will Record on February 1 Will ...
Which of the Following Items Would Not Affect the Investor's ...
Ruben Company Purchased $100,000 of Evans Company Bonds at 100 ...
The Investor Carrying an Investment by the Equity Method Records ...
When Recording Bond Interest Interest Receivable Is Reported as a ...