Question
Assume a 10 year, 7%, $10,000 bond. Interest payable semiannually. Yield= 6% Assume the bond was dated and issued 3/1/2001. 1. Record all journal entries
Assume a 10 year, 7%, $10,000 bond. Interest payable semiannually. Yield= 6%
Assume the bond was dated and issued 3/1/2001.
1. Record all journal entries for the first year (3/1/2001-12/31/2001) on the books of the investor under the assumption that the investor plans to hold the investment until maturity (i.e reports the investment at "amortized cost"). Hint: Do not use a premium or discount account. Amortize discounts and premiunms as a direct adjustment to the "Investment in Bonds" account.
2. Describe what the investor will report (give category and dollar amounts) in the balance sheet and income statement at 12/31/2001.
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