On January 1, 2020, White River Corporation paid $2,499,760 to acquire bonds of Precision Investment Corp with

Question:

On January 1, 2020, White River Corporation paid $2,499,760 to acquire bonds of Precision Investment Corp with a par value of $2,480,000. The annual contract rate on the bonds is 7.5% and interest is paid semiannually on June 30 and December 31. The bonds mature after three years. The market rate of interest was 7.2%. White River Corporation intends to hold the bonds until maturity.

Required

1. Prepare an amortization schedule for the investment showing only 2020.

2. Prepare White River's entries to record (a) the purchase of the bonds, (b) the receipt of the first two interest payments.

3. Show how the investment will appear on the December 31, 2020, balance sheet.

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... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...

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