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, 2012, 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

Quizplus · Accepted Answer

The journal entry for the purchase of the bonds would include a debit to Investments - Tetter Company for the cost of the bonds, which is $50,000. The accrued interest of $2,000 would be recorded separately as a credit to Interest Payable. Therefore, option D is the correct choice.

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