Piper Corporation, a public company, had the following transactions with trading investments:
Jan. 1 Purchased $120,000 of Harris Corp. 6% bonds at 101, to yield a market interest rate of 5.8%. Interest is payable semi-annually on July 1 and January 1.
July 1 Received semi-annual interest on Harris bonds.
1 Sold half of the Harris bonds for $64,000.
Dec. 31 Accrued interest at Piper's year end.
31 Piper's bonds were trading at 100.
Instructions
(a) Record the above transactions.
(b) How would your entry on July 1 change if the bonds were purchased to earn interest?