On January 1, 2007 Lynch Company acquired 13% bonds with a face value of $50,000. The bonds
Question:
On January 1, 2007 Lynch Company acquired 13% bonds with a face value of $50,000. The bonds pay interest on June 30 and December 31 and mature on December 31, 2009. Lynch Company paid $51,229.35, a price that yields a 12% effective annual interest rate.
Required
1. Record the purchase of the bonds.
2. Prepare an investment interest revenue and premium amortization schedule using the effective interest method.
3. Record the receipts of interest on June 30, 2007 and December 31, 2009.
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...
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1 2007 Jan 1 Investment in HeldtoMaturity Debt Securities 5122935 Cash 5122935 2 LYNCH COMPANY Bond ...View the full answer
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Related Book For 
Intermediate Accounting
ISBN: 978-0324300987
10th Edition
Authors: Loren A Nikolai, D. Bazley and Jefferson P. Jones
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