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(#6) Held-to-Maturity Bond Investment

On January 1, 2018, Gatrong Corporation purchased 13%, 5-year Fleming Corporation bonds with a face value of $200,000. It expects to hold these bonds until maturity. The bonds pay interest semiannually on June 30 and December 31. Gatrong paid $215,075, a price that yields a 11% effective annual interest rate.

Required:

Prepare the journal entry of Gatrong to record the purchase of the bonds.
CHART OF ACCOUNTS
Gatrong Corporation
General Ledger
ASSETS
111 Cash
121 Accounts Receivable
141 Inventory
152 Prepaid Insurance
181 Equipment
189 Accumulated Depreciation
191 Investment in Held-to-Maturity Debt Securities
LIABILITIES
211 Accounts Payable
231 Salaries Payable
250 Unearned Revenue
261 Income Taxes Payable
EQUITY
311 Common Stock
331 Retained Earnings
REVENUE
411 Sales Revenue
431 Interest Income
EXPENSES
500 Cost of Goods Sold
511 Insurance Expense
512 Utilities Expense
521 Salaries Expense
532 Bad Debt Expense
540 Interest Expense
541 Depreciation Expense
559 Miscellaneous Expenses
910 Income Tax Expense

Prepare the journal entry of Gatrong to record the purchase of the bonds on January 1.

GENERAL JOURNAL !(Just need the amounts)!

DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT

1

Jan. 1

Investment in Held-to-Maturity Debt Securities

2

Cash

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