Sagal Corporation has excess cash to invest and pays $200,000 to buy 7%, five-year bonds of Richmond Corporation, at face value, on June 30, 2016
The bonds pay interest on June 30 and December 31. Sagal intends to hold the bonds to maturity. The bonds are disposed of, at face value, on June 30, 2021.
Prepare the journal entry for December 31, 2016 (omit the explanation).
What will be an ideal response
2016
Dec. 31 Cash 7,000
Interest Revenue 7,000
Interest Revenue: $200,000 x .07 x 6/12 = $7,000
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