Winrow Co. purchased 50, 6% Johnston Company bonds for $50,000 cash plus brokerage fees of $500. Interest is payable semiannually on July 1 and January 1. The entry to record the December 31 interest accrual would include a

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Since the interest payment is semi-annual, the company would need to accrue interest for the six months ended December 31. Therefore, the entry would include a debit to Interest Receivable for $1,500 to recognize the interest that has been earned but not yet received. Interest Revenue and Debt Investments do not need to be involved in this transaction. The brokerage fees paid would be added to the cost of the bonds and amortized over their useful life.

Winrow Co Purchased 50, 6% Johnston Company Bonds for $50,000 Cash