Garfield Company made an investment in 80,000 of the 9%, 5-year bonds of Chester Corporation for 74,086,

Question:

Garfield Company made an investment in €80,000 of the 9%, 5-year bonds of Chester Corporation for €74,086, which provides an 11% return. Garfield plans to hold these bonds to collect contractual cash flows. Prepare Garfield’s journal entries for

(a) The purchase of the investment,

(b) The receipt of annual interest and discount amortization.

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...