On January 1, U

question 139

Short Answer

On January 1, U.K. Enterprise purchased as an investment a $1,000, 6% bond for $1,000. The bond pays interest on January 1 and July 1. The bond is sold on September 1 for $1,100 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?

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Definitions:

Primary Market

The primary market is where securities are created and sold for the first time, involving direct transactions between issuers and investors.

Security Issues

The process of offering new securities to the market, including initial public offerings (IPOs) and bond issuances.

Auction Market

A market where buyers and sellers enter competitive bids simultaneously; stock exchanges are an example, where prices are determined by the highest bid and lowest ask.

New York Stock Exchange

One of the largest stock exchanges in the world, located in New York City, where stocks of publicly held companies are bought and sold.