Ban Co. purchased 50 5% Waylan Company bonds on January 1 2016 for $50500 cash. Interest is payable annually on January 1. The entry to record the January 1 2017 annual interest payment would include a

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The interest payment is calculated as 5% of the face value of the bonds. Since the bonds were purchased for $50,500, the interest payment is $2,500 (5% of $50,000). The entry would include a credit to Interest Receivable for $2,500, as the interest is received.

Ban Co Purchased 50 5% Waylan Company Bonds on January 1