On January 1, 2019, Rodgers Company purchased $100,000 face value, 9 , 3 year bonds for $97,462 11, a price that yields a 10 effective annual interest rate The bonds pay interest semiannually on June 30 and December 31 Required 1 Record the purchase of the bonds 2 Prepare an investment interest income and discount amortization schedule using the effective interest method 3 Record the receipts of interest on June 30, 2019, and June 30, 2021 CHART OF ACCOUNTS Rodgers Company General Ledger ASSETS 111 Cash 121 Accounts Receivable 141 Inventory 152 Prepaid Insurance 181 Equipment 189 Accumulated Depreciation 191 Investment in Held to Maturity Debt Securities LIABILITIES 211 Accounts Payable 231 Salaries Payable 250 Unearned Revenue 261 Income Taxes Payable EQUITY 311 Common Stock 331 Retained Earnings REVENUE 411 Sales Revenue 431 Interest Income 434 Gain on Sale of Investment EXPENSES 500 Cost of Goods Sold 511 Insurance Expense 512 Utilities Expense 521 Salaries Expense 532 Bad Debt Expense 540 Interest Expense 541 Depreciation Expense 559 Miscellaneous Expenses 599 Loss on Sale of Investment 910 Income Tax Expense

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Posted on Aug 25, 2024

On January 1, 2019, Rodgers Company purchased $100,000 face value, 9%, 3-year bonds for $97,462.11, a price that yields a 10% effective annual interest rate.

On January 1, 2019, Rodgers Company purchased $100,000 face value, 9%, 3-year bonds for $97,462.11, a price that yields a 10% effective annual interest rate. The bonds pay interest semiannually on June 30 and December 31.

Required:

1.	Record the purchase of the bonds.
2.	Prepare an investment interest income and discount amortization schedule using the effective interest method.
3.	Record the receipts of interest on June 30, 2019, and June 30, 2021.

CHART OF ACCOUNTS

Rodgers Company

General Ledger

	ASSETS
111	Cash
121	Accounts Receivable
141	Inventory
152	Prepaid Insurance
181	Equipment
189	Accumulated Depreciation
191	Investment in Held-to-Maturity Debt Securities

	LIABILITIES
211	Accounts Payable
231	Salaries Payable
250	Unearned Revenue
261	Income Taxes Payable

	EQUITY
311	Common Stock
331	Retained Earnings

	REVENUE
411	Sales Revenue
431	Interest Income
434	Gain on Sale of Investment

	EXPENSES
500	Cost of Goods Sold
511	Insurance Expense
512	Utilities Expense
521	Salaries Expense
532	Bad Debt Expense
540	Interest Expense
541	Depreciation Expense
559	Miscellaneous Expenses
599	Loss on Sale of Investment
910	Income Tax Expense