On April 1, 2021, Bight Corporation issued $400,000, five-year bonds. On this date, Shoreline Corporation purchased the bonds from Bight to earn interest. Interest is received semi-annually on April 1 and October 1 and Shoreline's year end is March 31. Below is a partial amortization schedule for the first three interest periods of the bond issue.

Use a bond amortization schedule to record debt investment transactions at amortized cost.

Semi-Annual Interest Period	Interest Received	Interest Revenue	Amortization	Bond Amortized Cost
April 1, 2021				$418,444
October 1, 2021	$8,000	$6,277	$1,723	416,721
April 1, 2022	8,000	6,251	1,749	414,972
October 1, 2022	8,000	6,225	1,775	413,197

Instructions

a. Were the bonds purchased at a discount or at a premium?

b. What is the face value of the bonds?

c. What will the bonds' amortized cost be at the maturity date?

d. What is the bonds' contractual interest rate? The market interest rate?

e. Prepare the journal entries to record the purchase of the bonds; the receipt of interest on October 1, 2021; the accrual of interest on March 31, 2022; and the receipt of interest on April 1, 2022.

2-)

interest semi-annually on January 1 and July 1. Imperial Inc. has a December 31 year end. At December 31, 2021, the bonds are trading at 96.

Record debt investment reported at amortized cost and bond liability.

Instructions

a. Assuming Imperial Inc. purchased the bonds from Acme Corp., record the journal entries required on July 1 for (1) Imperial Inc., and (2) Acme Corp.

b. Record any adjusting journal entries that are required at December 31 for (1) Imperial Inc., and (2) Acme Corp.

c. Record the receipt and payment of the first interest payment on January 1, 2022, for (1) Imperial Inc., and (2) Acme Corp.