1

On January 1,2020 , Hummer Company purchased 7% bonds, having a maturity value of $500,000, for $570,000. The bonds provide the bondholders with a 5% yield. They are dated January 1,2020 , and mature January 1, 2030, with interest receivable June 30 and December 31 of each year. Hummer Company uses the effective-interest method to allocate any unamortized discount or premium. The bonds are classified in the held-to-maturity category. Instructions: 1. Prepare the journal entry at the date of the bond purchase. 2. Prepare the first 3 years of a bond amortization schedule. 3. Prepare the journal entries to record the interest received and the amortization for 2020. H17 Font clipbeard (x) A 8 On January 1,2020, Hummer Company purchased 7% bonds, having a maturity value of $500,000, for $570,000. The bonds provide the bondholders with a 5% yield. They are dated January 1,2020 , and mature January 1,2030 , with interest receivable June 30 and December 31 of each year. Hummer Company uses the effective-interest method to allocate any unamortized discount or premium. The bonds are classified in the held-to-maturity category. 3 Instructions: 4 Prepare the journal entry at the date of the bond purchase. 5 Prepare the first 3 years of a bond amortization schedule. 63 Prepare the journal entries to record the interest received and the amortization for 2020. \begin{tabular}{l|l} 7 & \\ 8 & \\ 9 & 10 \\ 11 & \end{tabular} \begin{tabular}{l|l|} \hline 12 & \\ \hline 13 & \\ \hline 14 & \\ \hline 15 & \\ \hline 16 & 3 \\ \hline 17 & \end{tabular} 1 Account Debit Credit 2 18 2019 21 Account 23 Schedule of Interest Revenue and Bond Amortization Effective Interest Method 7% Bonds Sold to Yield 5%