Question
On January 1, 2021 Kinney purchased $300,000 of 11%, 10 year bonds issued by JamTech Company. The bonds were priced to yield 10% interest. While
On January 1, 2021 Kinney purchased $300,000 of 11%, 10 year bonds issued by JamTech Company. The bonds were priced to yield 10% interest. While the bonds were originally purchased for their high interest rate, Kinney now believes JamTechs bond rating will increase in the first couple of months of 2022 due to the companys expansion. This should drop the effective interest rate for JamTechs bonds and Kinney plans to sell them when the prices rise at a profit. As of December 31, 2021, the bonds are selling at 106.
How to record as a journal entry?
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