Question

Ruben Company purchased $100,000 of Evans Company bonds at 100 plus $1,500 in accrued interest. The bond interest rate is 8% and interest is paid semiannually. The journal entry to record the purchase would be:_____.a. debit Investment-Evans Company Bonds, $100,000; credit Cash $100,000 b. debit Investment-Evans Company Bonds, $101,500; credit Cash, $101,500 c. debit Investment-Evans Company Bonds, $100,000, and Interest Receivable $1,500; credit Cash $101,500 d. debit Investment-Evans Company Bonds, $100,000; credit Interest Revenue, $1,500, and Cash, $98,500

Answer 1

Answer:

c. debit Investment-Evans Company Bonds, $100,000, and Interest Receivable $1,500; credit Cash $101,500

Explanation:

c. debit Investment-Evans Company Bonds, $100,000, and Interest Receivable $1,500; credit Cash $101,500

The interest is due on bonds of $ 100,00 so it is added to the total amount.

The other choices are incorrect as A does not account for interest due.

B does not indicate the amount of interest separately. D is wrong as interest is again deducted from the total of bonds also they are credited it is receivable not payable