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On January 1, 2020, Kingbird Company purchased $490,000, 10% bonds of Aguirre Co. for $453,933. The bonds were purchased to yield 12% interest. Interest is
On January 1, 2020, Kingbird Company purchased $490,000, 10% bonds of Aguirre Co. for $453,933. The bonds were purchased to yield 12% interest. Interest is payable semiannually on July 1 and January 1. The bonds mature on January 1, 2025. Kingbird Company uses the effective interest method to amortize discount or premium. On January 1, 2022, Kingbird Company sold the bonds for $455,456 after receiving interest to meet its liquidity needs. (a) Prepare the journal entry to record the purchase of bonds on January 1. Assume that the bonds are classified as available-for-sale. (Credit account titles are automatically indented when 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.) Debit Credit Date Account Titles and Explanation Jan. 1, 2020
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