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On September 1, Ayayai Ltd. purchased $75,000 of five-year, 6% bonds for $63,417, resulting in an effective (yield) rate of 10%. The bonds pay interest
On September 1, Ayayai Ltd. purchased $75,000 of five-year, 6\% bonds for $63,417, resulting in an effective (yield) rate of 10%. The bonds pay interest each March 1 and September 1. Ayayai Ltd. applies ASPE, accounts for the investment under the amortized cost approach using the effective interest accounting policy, and has a December 31 year end. The following March 1 , after receiving the semi-annual interest on the bonds, Ayayai sells the bonds for $65,917. (a) Prepare Ayayai's journal entry for the purchase of the investment. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
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