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On January 1, 2018, Warner Inc. purchased 3.5%, $50,000 face value Jackson Corp. bonds at face value. Interest is payable semi-annually on July 1 and January 1. The bonds are classified as held for trading investments. The bonds were sold on July 2, 2018 for $53,000.
-Warner's entry to record the sale on July 2, after the July 1 interest was received and recorded, would include a
A) debit to Cash for $53,875.
B) credit to Interest Revenue for $875.
C) credit to Realized Gain on Held for Trading Investments for $3,000.
D) credit to Held for Trading Investments for $53,000.

Question

Quizplus · Accepted Answer

The bonds were sold for $53,000, which is $3,000 more than the face value of $50,000. This results in a realized gain of $3,000, which should be credited to Realized Gain on Held for Trading Investments.

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