On January 1, 2020, Blue Spruce Company purchased $304,000 worth of 8% bonds of Aguirre Co. for $280,526. The bonds were purchased to yield 10% interest. Interest is payable semi-annually, on July 1 and January 1. The bonds mature on January 1, 2025. Blue Spruce Company uses the effective interest method to amortize the discount or premium. On January 1, 2022, to meet its liquidity needs, Blue Spruce Company sold the bonds for $281,752, after receiving interest.

 

 

Prepare the journal entry to record the purchase of bonds on January 1. Assume that the bonds are classified as FV-OCI. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round answers to 0 decimal places, eg. 5,275.) Date Account Titles and Explanation Debit Credit Jan. 1 FV-OCI Investments 280,526 Cash 280,526