The following held-to-maturity investment transactions were completed during 2015 by Torrence Inc.: Jan. 21. Purchased 30 $1,000

Question:

The following held-to-maturity investment transactions were completed during 2015 by Torrence Inc.:

Jan. 21. Purchased 30 $1,000 par value Government of Canada bonds at 100 plus 20 days' accrued interest. The bonds pay 6% annual interest on June 30 and January 1.

Jun. 30. Received semiannual interest on bond investment.

Sep. 5. Sold 12, $1,000 par value bonds at 98 plus 67 days' accrued interest.

a. Journalize the entries for these transactions.

b. Provide the December 31, 2015, adjusting journal entry for semiannual interest earned from the bond coupon.

Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...