On April 1, 2011, Albert Company purchased $50,000 of Tetter Company's 12% bonds at 100 plus accrued interest of $2,000. On June 30, 2011, Albert received its first semiannual interest. On February 1, 2011, Albert sold $40,000 of the bonds at 103 plus accrued interest. The journal entry Albert will record on April 1, 2011 for the purchase of the bonds will include:

Question

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The journal entry on April 1, 2011, will include a debit to Investments - Tetter Company for $50,000 to record the purchase of the bonds at 100, which is their face value. The accrued interest of $2,000 will be included in the purchase price, so there is no need to credit Interest Payable or record a separate transaction for it. There will also be a credit to Cash for $50,000 to reflect the payment made for the bonds.

On April 1, 2011, Albert Company Purchased $50,000 of Tetter