On January 1, the company purchased debt securities for cash of $25,518. The securities have a face

Question:

On January 1, the company purchased debt securities for cash of $25,518. The securities have a face value of $20,000, and they mature in 15 years. The securities have a stated interest rate of 10%, and interest is paid semiannually, on June 30 and December 31. The prevailing market interest rate on these debt securities is 7% compounded semiannually. The securities were purchased as a held-to-maturity investment. Make the journal entries to record

(1) The purchase of the securities,

(2) The June 30 receipt of interest, and

(3) The December 31 receipt of interest.

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...