Question
On January 1, 2011, Houseman Company acquired $100,000 face value 8% bonds of Lamont Corporation to yield 6%. The bonds were dated January 1, 2011,
On January 1, 2011, Houseman Company acquired $100,000 face value 8% bonds of Lamont Corporation to yield 6%. The bonds were dated January 1, 2011, and mature on December 31, 2015, with interest payable each January 1. Houseman intends to hold the bonds to maturity.
Instructions
Assuming the FV NI model is applied, prepare the following entries in the books of Houseman:
(a) Acquisition of bonds on January 1, 2011
(b) The year-end adjusting entry at December 31, 2011
(c) The receipt of the first interest payment on January 1, 2012
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