On January 1, Skills Company Purchased as a Short-Term Investment $\quad$

question 113

Short Answer

On January 1, Skills Company purchased as a short-term investment a $1,000, 6% bond for $1,000. The bond pays interest on January 1. The bond is sold on July 1 for $1,200 plus accrued interest. Interest has not been accrued since the last interest payment date. What is the entry to record the cash proceeds at the time the bond is sold? a. Cash. $\quad$$\quad$ 1,200
$\quad$ Debt Investments $\quad$$\quad$ 1,200
b. Cash $\quad$$\quad$ 1,230
$\quad$ Debt Investments $\quad$$\quad$ 1,000
$\quad$ Gain on Sale of Debt Investments $\quad$$\quad$ 200
$\quad$ Interest Revenue $\quad$$\quad$ 30
c. Cash $\quad$$\quad$ 1,230
$\quad$ Debt Investments $\quad$$\quad$ 1,200
$\quad$ Interest Revenue $\quad$$\quad$ 30
d. Cash $\quad$$\quad$ 1,200
$\quad$ Debt Investments $\quad$$\quad$ 1,000
$\quad$ Gain on Sale of Debt Investments $\quad$$\quad$ 200

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Definitions:

Repeated Games

A strategic situation where individuals or firms face the same opponents in a series of interactions, allowing for the development of strategies over time.

Simultaneous

Occurring, operating, or done at the same time.

Sequential

Describes processes, events, or things that follow one after the other in a specific order or sequence.

Credible Threats

Declarations or signals that a party intends to inflict harm or loss on another in the event of non-compliance, which are believable and likely to be carried out.