On September 30, 2021, Baytex, Inc., purchased 6.8% bonds of Whitmore Corporation at 98 as a long-term, held-to-maturity investment. The maturity value of the bonds will be $35,000 on September 30, 2026. The bonds pay interest on March 31 and September 30. Baytex’s fiscal year end is December 31.

Requirements 

1. What method should Baytex use to account for its investment in the Whitmore Corp. bonds?

2. Using the straight-line method of amortizing the discount on bonds, journalize all of Baytex’s transactions on the bonds for 2021.

3. Show how Baytex would report everything related to the bond investment on its balance sheet at its year-end, December 31, 2021.