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On January 1, 2010, Bregeut Company, a calendar year corporation, purchased 600 of the $1,000 face value, 9% bonds of Clariant Incorporated, for CHF622,000, including brokerage fees.The bonds, which mature on January 1, 2015, pay interest semiannually on July 1 and January 1.
-The December 31, 2010 adjusting entry for the bonds on Bregeut's books will include

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On January 1, 2010, Bregeut Company, a calendar year corporation, purchased 600 of the $1,000 face value, 9% bonds of Clariant Incorporated, for CHF622,000, including brokerage fees.The bonds, which mature on January 1, 2015, pay interest semiannually on July 1 and January 1.
-The December 31, 2010 adjusting entry for the bonds on Bregeut's books will include

Quizplus · Accepted Answer

The bonds pay 9% annual interest on a $1,000 face value, which is CHF90 per bond. For 600 bonds, this is CHF54,000 annually or CHF27,000 semiannually. The adjusting entry on December 31, 2010, would recognize the interest revenue earned but not yet received, thus crediting Interest Revenue for CHF27,000.

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