On January 1, 2017, Palermo Corp. purchased $50,000 of Sicilia Ltd.'s 5%, 5-year bonds for $52,250, since the market interest rate was approximately 4%. The bonds pay interest on January 1 and July 1. Palermo Corp. has a calendar year end, and classified the bonds as a long-term investment. The fair value of the bonds on December 31, 2017 was $51,500. On January 2, 2018, Palermo sold the bonds for $51,000.InstructionsPrepare the required entries to record the above transactions and events. Round all values to the nearest dollar.

Question

Quizplus · Accepted Answer

The Answer of On January 1, 2017, Palermo Corp. purchased $50,000 of Sicilia Ltd.'s 5%, 5-year bonds for $52,250, since the market interest rate was approximately 4%. The bonds pay interest on January 1 and July 1. Palermo Corp. has a calendar year end, and classified the bonds as a long-term investment. The fair value of the bonds on December 31, 2017 was $51,500. On January 2, 2018, Palermo sold the bonds for $51,000.InstructionsPrepare the required entries to record the above transactions and events. Round all values to the nearest dollar.