On July 1 of the current year, a company paid $200,000 to purchase 7%, 10-year bonds with a par value of $200,000; interest is paid semiannually on June 30 and December 31. The company intends to hold the bonds until they mature. Prepare the journal entries to record (1) the bond purchase, (2) the receipt of the first semiannual interest payment on December 31 of the current year, and (3) the receipt of the second semiannual payment on June 30.
What will be an ideal response?
| (1) | 7/1 | Debt Investments-HTM | 200,000 | ? |
| ? | ? | Cash | ? | 500,000 |
| ? | ? | ? | ? | ? |
| (2) | 12/31 | Cash | 7,000 | ? |
| ? | ? | Interest Revenue ($200,000 * 0.07 * 6/12) | ? | 7,000 |
| ? | ? | ? | ? | ? |
| (3) | 6/30 | Cash | 7,000 | ? |
| ? | ? | Interest Revenue ($200,000 * 0.07 * 6/12) | ? | 7,000 |
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What will be an ideal response?