Ruben Company purchased $100,000 of Evans Company bonds at 100. Ruben later sold the bonds at $104,500 plus $500 in accrued interest. The journal entry to record the sale of the bonds would be

Question

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The journal entry to record the sale of the bonds would be to debit Cash for the total amount received ($105,000), credit Investments-Evans Company Bonds for the original cost of the bonds ($100,000), credit Gain on Sale of Investments for the difference between the amount received and the original cost ($4,500), and credit Interest Revenue for the $500 in accrued interest that Ruben received upon selling the bonds. Therefore, the correct choice is D.

Ruben Company Purchased $100,000 of Evans Company Bonds at 100