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On January 1, 2022, Warner Inc.purchased 3.5%, $50,000 face value Jackson Corp.bonds at face value.Interest is payable semi-annually on July 1 and January 1.The bonds are classified as trading investments.The bonds were sold on July 2, 2022 for $53,000.
-Warner's entry to record the sale on July 2, after the July 1 interest was received and recorded, would include a
A)debit to Cash for $53,875.
B)credit to Interest Income for $875.
C)credit to Realized Gain on Trading Investments for $3,000.
D)credit to Trading Investments for $53,000.

Question

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On January 1, 2022, Warner Inc.purchased 3.5%, $50,000 face value Jackson Corp.bonds at face value.Interest is payable semi-annually on July 1 and January 1.The bonds are classified as trading investments.The bonds were sold on July 2, 2022 for $53,000.
-Warner's entry to record the sale on July 2, after the July 1 interest was received and recorded, would include a
A)debit to Cash for $53,875.
B)credit to Interest Income for $875.
C)credit to Realized Gain on Trading Investments for $3,000.
D)credit to Trading Investments for $53,000.

Quizplus · Accepted Answer

The bonds were sold for $53,000, which is $3,000 more than the face value of $50,000, resulting in a realized gain of $3,000.

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