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Journal entries to record the sale of the bonds

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Question - On November 1, 2018, Reid Corporation acquired bonds with a face value of $700,000 for $673,618.61. The bonds carry a stated rate of interest of 10%, were purchased to yield 11%, pay interest semiannually on April 30 and October 31, were purchased to be held to maturity, and are due October 31, 2022. On November 1, 2019, in contemplation of a major acquisition, the bonds were sold for $700,000. Reid is on a fiscal year accounting period ending October 31 and uses the effective interest method.

Required - Journal entries to record the sale of the bonds would include:

a. Debit to Gain on Sale of Bond Investment - HTM of $22,170.65

b. Debit to Bond Investment - HTM of $677,829.35

c. Debit to Bond Investment - HTM of $700,000

d. Debit to Discount on Bond Investment - HTM of $22,170.65

Reference no: EM133183685

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