Purchase and Sale of Bonds Starship Enterprises enters into the following transactions during…


Purchase and Sale of Bonds

Starship Enterprises enters into the following transactions during 2008 and 2009:

2008

Jan. 1: Purchased $100,000 face value of Northern Lights Inc. bonds at face value. The newly

issued bonds have an inerest rate of 8% paid semiannually on June 30 and December

31. The bonds mature in five years.

June 30: Received interest on the Northern Lights bonds.

Dec. 31: Received interest on the Northern Lights bonds.

2009

Jan. 1: Sold the Northern Lights Inc. bonds for $102,000.

Required

1. Prepare all necessary journal entries on Starship’s records to account for its investment in the

Northern Lights bonds.

2. Why was Starship able to sell its Northern Lights bonds for $102,000?

 

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