Barr Company acquires 60, 10%, 5 year, €1,000 Community bonds on January 1, 2011 for €61,250.This includes a brokerage commission of €1,250. Assume Community pays interest on January 1 and July 1, and the July 1 entry was done correctly.The journal entry at December 31, 2011 would include a credit to

Question

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The bonds pay interest semi-annually, so by December 31, 2011, Barr Company would have earned interest for 6 months (July 1 to December 31). The interest for 6 months on 60 bonds with a face value of €1,000 each at 10% annual interest is €3,000. Therefore, the entry would include a credit to Interest Revenue for €3,000.

Barr Company Acquires 60, 10%, 5 Year, €1,000 Community Bonds