On January 1, 2010, the Kelly Corporation acquired bonds with a face value of $500,000 for $483,841.79,

Question:

On January 1, 2010, the Kelly acquired bonds with a of $500,000 for $483,841.79, a price that yields a 10% effective annual interest rate. The bonds carry a 9% stated rate of interest, pay interest semiannually on June 30 and December 31, are due December 31, 2013 and are being held to maturity.

Required
Prepare journal entries to record the purchase of the bonds and the first two interest receipts using:
1. The straight-line method of amortization.
2. The effective interest method of 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... Face Value
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...