1. Investment in Debt Securities

On January 1, 2020, Parr Company purchased 8% bonds, having a maturity value of$900,OOO, for $830,502 cash. The bonds provide the bond holders witha yield. They are dated January 1, 2020, and mature on December 31, 2024. Interest is receivable semi-annually on June 30 and December 31 ofeach year. Parr uses the effective interest method to allocate unamortized discount or premium. Parr does not plan to hold the bonds until maturity and did not purchase the bonds with the intent of selling in the near term.

Instructions:

1. Prepare the first four lines of a bond amortization table.

2. Prepare all necessary journal entries for 2020. The bonds have a market value of $840,000 on December 3 1, 2020.