Question

Griffin purchased a bond on January ​1, 2018​, for $ 140 comma 000. The bond has a face value of $ 140 comma 000 and matures in 20 years. The bond pays interest on June 30 and December 31 at a 3​% annual rate. Griffin plans on holding the investment until maturity. Read the requirementsLOADING.... Requirement 1. Journalize the 2018 transactions related to Griffin​'s bond investment. Explanations are not required. ​(Record debits​ first, then credits. Exclude explanations from journal​ entries.) Begin by journalizing Griffin​'s investment on January ​1, 2018.

Answer 1

Answer:

January 1 2018:

Dr Bond investment     $140,000

Cr Cash                                           $140,000

June 30 2018:

Dr cash       $2,100

Cr Interest income     $2,100

December 31 2018:

Dr cash       $2,100

Cr Interest income     $2,100

Explanation:

Upon purchase of the bond Griffin would credit cash with $140,000 since cash is being parted with and debit bond investment with $140,000 as an asset .

On June 30 2018 the interest income of $2,100 ($140,000*3%*6/12) would e received,hence debited to cash account and credited to interest income account.

On December  31 2018 the interest income of $2,100 ($140,000*3%*6/12) would e received,hence debited to cash account and credited to interest income account.

All in all the total of $4,200 would be received in the year 2018 as income from the bond investment