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 semi-annually. The journal entry to record the receipt of interest on the next interest payment date would be:


A.Debit: Cash $4,000; Credit: Interest Revenue $4,000

B.Debit: Cash $4,000; Credit: Interest Receivable $4,000

C.Debit: Cash $4,000; Credit: Interest Receivable $1,500 and Interest Revenue $2,500

D.Debit: Cash $2,500; Credit: Interest Revenue $2,500

Answer 1

C.Debit: Cash $4,000; Credit: Interest Receivable $1,500 and Interest Revenue $2,500