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On January 1, 2018, West Company purchased $600,000 of 6%, 5-year bonds, as an available-for-sale security, with interest payable on July 1 and January 1.

On January 1, 2018, West Company purchased $600,000 of 6%, 5-year bonds, as an available-for-sale security, with interest payable on July 1 and January 1. The bonds sell for $623,625, which results in a premium of $23,625. Amortization is recorded when interest is received by the straight-line method (by months and round to the nearest dollar). (Assume bonds are available for sale.)

Instructions

(a) Prepare the journal entry on April 1, 2018.

(b) Complete the Interest Revenue Received and Bond Amortization Schedule.

(c) Prepare the journal entry to record interest revenue on July 1, 2018.

Schedule Interest Revenue

Bond Premium Amortization

Date

Cash

Received

Interest Revenue

Bond Premium

Amortization

Carrying Amount

Of Bonds

1/1/18

623,625

7/1/18

1/1/19

7/1/19

1/1/20

7/1/20

1/1/21

7/1/21

1/1/22

7/1/22

1/1/23

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