Demo problem 12-1 On January 1, 2025, Ajax Corporation purchased Universal Co. bonds with face value of $200,000 and a coupon rate of 8% per annum. The bonds were purchased to yield 10% interest per annum. Interest is payable semiannually on June 30 and December 31. The bonds mature on December 31, 2027. Required: Assume the bonds will be held as Held-to-Maturity Securities: (a) Prepare the journal entry to record the purchase of bonds on January 1, 2025. (b) Prepare the journal entries to record the semi-annual interest payments on June 30, 2025 and December 31, 2027. Amount PV factor Present value Discount Use factors in PV tables Description Principal Interest Use formula PV Amortization Table Bond carrying value Date Discount Interest received Interest revenue amortization 1/1/2025 6/30/2025 12/31/2025 6/30/2026 12/31/2026 6/30/2027 12/31/2027 Journal entries Bond purchase on 1/1/2025 Interest payment on 6/30/2025 Interest payment on 12/31/2027