Purchase and Sale of Bonds
Starship Enterprises enters into the following transactions during 2008 and 2009:
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.
Jan. 1: Sold the Northern Lights Inc. bonds for $102,000.
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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