On October 31, 2010, an investor bought an 8%, $1,000,000, 10-year bonds at 98. The investor was also required to pay the appropriate accrued interest. Interest on this bond is payable semi-annually every January 1and July 1.

Instructions

1. Prepare the journal entries from the issuer's perspective on October 31, 2010, to record this acquisition of the bonds and accrued interest. Ignore any service charges. (4 marks)
2. Provide a recap on the net amount of interest earned by the investor of the bonds on January 1, 2011, when the bond interest was received. Show all your calculations. 

Answer rating: 100% (QA)

The journal entry will be Date Account Title Debit Credit Octob... View the full answer