On July 1, 2014, Salt Mine Corporation purchased at par 8% bonds having a maturity value of

Question:

On July 1, 2014, Salt Mine Corporation purchased at par 8% bonds having a maturity value of $250,000. The bonds are dated July 1, 2014, and mature July 1, 2019, with interest payable on July 1 of each year. The bonds are classified in the held-to-maturity category, and the company does not use reversing entries.

Instructions

(a) Prepare the journal entry at the date of the bond purchase.

(b) Prepare the journal entry to record the interest earned and interest received for 2014.

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... Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...