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On January 1, 2020, Sage Company purchased 5% bonds, having a maturity value of $400,000 for $343,150. The bonds provide the bondholders with a
On January 1, 2020, Sage Company purchased 5% bonds, having a maturity value of $400,000 for $343,150. The bonds provide the bondholders with a 7% yield. They are dated January 1, 2020, and mature January 1, 2027, with interest paid on June 30 and December 31 of each year. Sage Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified as available-for-sale category. The fair value of the bonds at December 31 of each year-end is as follows. 2020 $344,000 2023 $364,000 2021 $339,000 2024 $384,000 2022 $334,000 (a) Prepare the journal entry at the date of the bond purchase. (b) Prepare the journal entries to record the interest revenue and recognition of fair value for 2020. Dronare the journal entry to record the recognition of fair value for 2021
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