Answer

Let's assume that Bridge company decided to hire you as their new financial manager because the old manager was not effective in managing financial instruments because he did not pass intermediate accounting course. Your first task was to account for a new investment which was a bond purchased on 1.1.2020 for $14,492.9. The bond had a maturity value of 15,000 paying 10% interest at the beginning of each year starting 1.1.2021.The maturity date of the bond is 1.1.2022. Based on market index the yield rate for this investment is 12%. After careful consideration, the company decided to account for this investment as held for collection and selling. Assume that the FV of this bond at the end of 2020 and 2021 was $13,900 and $14,000 respectively. You are required to write all the required journal entries for the year of 2020