On December 31, 2017, when the market interest rate is 6 percent, an investor purchases $700,000 of Solar Ltd. 10-year, 5 percent bonds at issuance for $647,929. Interest is paid semi-annually. Assume that the investor plans to hold the investment to maturity. Disregard commissions.
Required
Prepare a schedule for amortizing the discount on the bond investment through December 31, 2018. The investor uses the effective-interest amortization method. Use Exhibit 15-5 on page 852 as a guide. Journalize the purchase on December 31, 2017, the first semi-annual interest receipt on June 30, 2018, and the yearend interest receipt on December 31, 2018.