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On January 1, 2020, The Company purchased 13% bonds, having a maturity value of $308,000 for $330,766.44. The bonds provide the bondholders with a 11%
On January 1, 2020, The Company purchased 13% bonds, having a maturity value of $308,000 for $330,766.44. The bonds provide the bondholders with a 11% yield. They are dated January 1, 2020, and mature January 1, 2025, with interest received on January 1 of each year. Whispering 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 | $328,700 | 2023 | $317,300 | |||
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2021 | $316,400 | 2024 | $308,000 | |||
2022 | $315,400 |
(a) | Prepare the journal entry at the date of the bond purchase. | |
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(b) | Prepare the journal entries to record the interest revenue and recognition of fair value for 2020. | |
(c) | Prepare the journal entry to record the recognition of fair value for 2021. |
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