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24) On January 1, 20x1, Jovi Company purchased $200,000, 8% bonds of Mercury Co. for $184,557. The bonds were purchased to yield 10% interest. Interest
24) On January 1, 20x1, Jovi Company purchased $200,000, 8% bonds of Mercury Co. for $184,557. The bonds were purchased to yield 10% interest. Interest is payable semiannually on July 1 and January 1. The bonds mature on January 1, 20x5. Jovi uses the effective interest method to amortize discount or premium. On January, 20x2, Jovi sold the bonds for $185,363 after receiving interest to meet its urgent liquidity needs. Required: Prepare Jovi's journal entries for the following transactions. Assume the bonds are classified as held-to maturity. (1) Prepare the journal entry to record the purchase of bonds on January 1. (2) Prepare the journal entry to record the semiannual interest on July 1, 20x1. (3) Prepare the adjusting journal entry for the accrued interest on December 31, 20x1. (4) Prepare the journal entry to record the receipt of interest on January 1, 20x2. (5) Prepare the journal entry to record the sale of the bonds on January 1, 20x2
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