Macy’s, Inc., operates nearly 850 Macy’s and Bloomingdale’s department stores nationwide. The company does more than $24 billion in sales each year.
Assume that as part of its cash management strategy, Macy’s purchased $12 million in bonds at par for cash on July 1, 2015. The bonds pay 8 percent interest annually with payments June 30 and December 31 and mature in 10 years. Macy’s plans to hold the bonds until maturity.
Required:
1. Record the purchase of the bonds on July 1, 2015.
2. Record the receipt of interest on December 31, 2015.