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On August 1, 2020, Peterson Corp. acquired 20, $1,000,8% bonds at 95 plus accrued interest. The bonds were dated May 1, 2020, and mature on
On August 1, 2020, Peterson Corp. acquired 20, $1,000,8% bonds at 95 plus accrued interest. The bonds were dated May 1, 2020, and mature on April 30, 2020, with interest paid semi-annually on October 31 and April 30. The bonds will be held to maturity. Assuming the amortized cost model is used, the entry to record the purchase of the bonds on August 1, 2020 is O Bond Investment at Amortized Cost Interest Receivable 9,500 200 Cash 9,700 Bond Investment at Amortized Cost 9,700 Cash 9,700 O Bond Investment at Amortized Cost 10,000 Interest Income 200 Discount on Debt Securities 500 Cash 9,700 Bond Investment at Amortized Cost 9,700 Interest Income 200 Cash 9,500
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