Barr Company acquires 50, 10%, 5 year, €1,000 Community bonds on January 1, 2014 for €50,000. Assume Community pays interest on January 1 and July 1, and the July 1 entry was done correctly. The journal entry at December 31, 2014 would include a credit to

Question

Quizplus · Accepted Answer

The bonds pay interest semi-annually, so each payment is €2,500 (50 bonds x €1,000 x 10% / 2). By December 31, 2014, Barr Company would have earned €2,500 in interest revenue for the second half of the year, which is credited to Interest Revenue.

Barr Company Acquires 50, 10%, 5 Year, €1,000 Community Bonds