Repeat Exercise 14-43, assuming discounts and premiums are amortized using the straight-line interest method.

Exercise 14-43

On July 1, 2020, West Company purchased for cash, eight \(\$ 10,000\) bonds of North Corporation to yield \(10 \%\). The bonds pay \(9 \%\) interest, payable on a semiannual basis each July 1 and January 1, and mature on July 1,2023. The bonds are classified as held-to-maturity securities. The annual reporting period ends December 31. Assume the effective interest method of amortization of any discount or premium.

Required

a. Prepare a bond amortization schedule for 2020 and 2021 using the effective interest method.

b. Record the entry for the purchase of the bonds by West Company on July \(1,2020\).

c. Record the adjusting entry by West Company on December 31, 2020. The fair value of the bonds at December 31,2020 , was \(\$ 81,000\).

d. Indicate the effects of this investment on the 2020 income statement and year-end balance sheet.

e. Record the receipt of interest on January 1,2021.

f. After the interest payment on July 1,2021 , two of the bonds were sold for \(\$ 19,300\) cash. Provide the required entries on July \(1,2021\).