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On January 1, 2025, Pharoah Company purchased 5% bonds, having a maturity value of $450,000 for $386,044. The bonds provide the bondholders with a 7%
On January 1, 2025, Pharoah Company purchased 5% bonds, having a maturity value of $450,000 for $386,044. The bonds provide the bondholders with a 7% yield. They are dated January 1, 2025, and mature January 1, 2035, with interest receivable June 30 and December 31 of each year. Pharoah Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified as available-for-sale. The fair value of the bonds at December 31 of each year-end is as follows. 2025 $387,000 2028 $407,000 2026 382,000 2029 427,000 2027 377,000 (a) Prepare the journal entry at the date of the bond purchase. (b) Prepare the journal entries to record the interest received and recognition of fair value for 2025
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