Carrol Inc., a calendar year-end company, has the following information available with respect to an investment it classifies as an available-for-sale security.

• On November 1, 2018 (11/1/18), Carrol Inc. purchased 15-year bonds with a total face value of $200,000 and a face interest rate of 5% compounded semi-annually. The bonds were purchased for $180,400 to yield an effective rate of 6% compounded semi-annually. Interest is received semi-annually on November 1st and May 1st beginning May 1, 2019.
• On 12/31/18, Carrol accrues interest revenue on these bonds using the effective-interest method.
• On 12/31/18, the bonds are worth $184,000. There have been no previous fair market adjustments for AFS securities.
• On 5/1/19, the company receives their first interest payment from the available-for-sale security.

Face Rate < Market Rate = DISCOUNT!

Confirm that the rounded issue price of this bond investment is equal to the amount of $180,400 given above.

Using the effective-interest method, complete a partial amortization schedule for this bond investment by filling in the unshaded and empty blocks in the amortization schedule below.

Prepare Carrol’s journal entries for the dates noted assuming the bonds are classified as available-for-sale securities. The 11/1/18 entry is already shown, and a check figure is provided at the bottom of this problem. Complete the 12/31/18 entries in the same order they are given on the prior page.