Question
On January 1, 2020, Pharoah Company purchased 9% bonds having a maturity value of $330,000, for $357,062.64. The bonds provide the bondholders with a 7%
On January 1, 2020, Pharoah Company purchased 9% bonds having a maturity value of $330,000, for $357,062.64. The bonds provide the bondholders with a 7% yield. They are dated January 1, 2020, and mature January 1, 2025, with interest received on January 1 of each year. Pharoah Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category.
(a) Prepare the journal entry at the date of the bond purchase.
(b) Prepare a bond amortization schedule. (Round answers to 2 decimal places, e.g. 2,525.25.)
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