On January 1, 2020, Swifty Limited paid $561,003.30 for 10% bonds with a maturity value of $540,000. The bonds provide the bondholders with a 9% yield. They are dated January 1, 2020, and mature on January 1, 2025, with interest receivable on December 31 of each year. Swifty accounts for the bonds using the amortized cost approach, applies ASPE using the effective interest method, and has a December 31 year end.

Prepare the journal entry to record the bond purchase.

Date	Account Titles and Explanation	Debit	Credit
Jan 1, 2020

Prepare a bond amortization schedule.

Schedule of Interest Income and Bond Premium Amortization Effective Interest Method
Date	Cash Received		Interest Income		Premium Amortization		Carrying Amount of Bonds
01/01/20							$
12/31/20	$		$		$
12/31/21
12/31/22
12/31/23
12/31/24
	$		$		$

Prepare the journal entry to record interest received and interest income for 2020.

Date	Account Titles and Explanation	Debit	Credit
Dec 31, 2020

Prepare the journal entry to record interest received and interest income for 2021.

Date	Account Titles and Explanation	Debit	Credit
Dec 31, 2021

Prepare the journal entry to record the redemption of the bond at maturity.

Date	Account Titles and Explanation	Debit	Credit
Jan 1, 2025

If Swifty used the straight-line method of discount/premium amortization, prepare the journal entry to record interest received and interest income the company would make each year.

Account Titles and Explanation	Debit	Credit

Compare the total interest income reported over the five-year period under the effective interest method and the straight-line method.

		Total interest income
Effective interest method		$
Straight-line method		$

Total interest income under the two methods

.