Answer:
b. credit to Gain on Sale of Investments for $2,400.
Explanation:
May 1, 20Y6
Purchase price of Bond = $100
Number of Bond Purchased = $100,000 / 100 = 1,000 per bond
February 1, 20Y7
Sale Price of Bond = $103 per Bond
Gain on Sale = $103 - $100 = $3 per bond
Number of Bond Sold = $80,000 / 100 = 800 bonds
Gain on sold bonds = 800 bonds x $3 per bond = $2,400
Journal Entry Will be as follows:
Dr. Cr.
Cash (800 x 103) $82,400
Gain on sale $2,400
Investment in Bond $80,000