On January 1, 2018, Winston Company purchased 5% bonds with a face value of $60,000 for par. Winston Company intends to hold the bonds until maturity. Interest is payable semiannually on July 1 and January 1. The company's fiscal year ends on December 31. The company uses the straight-line amortization method for discounts and premiums. The journal entry on December 31, 2018 is:

Question

Quizplus · Accepted Answer

The interest for the period from July 1 to December 31 is accrued, so Interest Receivable is debited and Interest Revenue is credited for $1500 (5% of $60,000 face value for half a year).

On January 1, 2018, Winston Company Purchased 5% Bonds with a Face