Jody's, Inc., operates nearly 850 Jody's and Martindale's department stores globally. The company does more than $24 billion in sales each year.

Jody's, Inc., operates nearly 850 Jody's and Martindale's department stores globally. The company does more than $24 billion in sales each year.

Assume that as part of its cash management strategy, Jody's purchased $11.2 million in bonds at par for cash on July 1 of the current year.  The bonds pay 11 percent interest annually, with payments on June 30 and December 31, and mature in 7 years. Jody's plans to hold the bonds until maturity.

Required:

1. Record the purchase of the bonds on July 1 of the current year.

 

Record the receipt of interest on December 31 of the current year.

 

Explanation:

2.

Interest revenue = ($11.2 million × 11% × 6/12 of a year) = $616,000