Jacks Corporation purchases $200,000 bonds plus accrued interest for 2 months of $2,000 from Kennedy Company on March 1. The bonds have an annual interest rate of 6% payable on June 30 and December 31. The entry to record the purchase of the bonds would include a
A) debit to Interest Receivable for $2,000
B) debit to Investment in Bonds for $202,000
C) debit to Cash for $200,000
D) credit to Interest Revenue for $2,000

Question

Quizplus · Accepted Answer

The accrued interest of $2,000 represents interest that has been earned but not yet received, so it should be recorded as a debit to Interest Receivable.

Jacks Corporation Purchases $200,000 Bonds Plus Accrued Interest for 2