Question
On January 1, 2014, Novotna Company purchased $439,000, 6% bonds of Aguirre Co. for $403,392. The bonds were purchased to yield 8% interest. Interest is
On January 1, 2014, Novotna Company purchased $439,000, 6% bonds of Aguirre Co. for $403,392. The bonds were purchased to yield 8% interest. Interest is payable semiannually on July 1 and January 1. The bonds mature on January 1, 2019. Novotna Company uses the effective-interest method to amortize discount or premium. On January 1, 2016, Novotna Company sold the bonds for $404,989 after receiving interest to meet its liquidity needs .Prepare the journal entry to record the purchase of bonds on January 1. Assume that the bonds are classified as available-for-sale. Prepare first 2 years amoritzation table. prepare july 1 and dec 31 journal entries.
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