PROBLEM 3 - AMORTIZED COST BOND INVESTMENT (13 marks) Smoke Corporation purchased a 9%, $100,000 bond investment in A Company on January 1, 2010. The following partial amortization table reflects the bond investment on January 1, 2010, with a 5 year term, (due Dec. 31, 2014) when the annual market rate of interest was 10%. Smoke follows IFRS. Interest is paid to Smoke June 30 and Dec 31. Smoke has an April 30 year end. Period Ended Amortized Cash Interest Received Interest Income Carrying Value Bond Discount 96,139 Jan. 1, 2010 (issue date) 4500 4807 307 96,446 Jan 1, 2010- June 30, 2010 4500 4823 323 96,769 July 1, 2010 - Dec 31, 2010 4500 4839 339 97,108 Jan 1, 2011 - June 30, 2011 4500 4856 356 97 464 July 1, 2011 - Dec 31, 2011 Required: a) Prepare the journal entry to record the purchase of the bond by Smoke at Jan 1, 2010. (1 mark) b) Prepare the journal entry to accrue interest and adjust the bond investment at April 30, 2011. (round answers to the nearest dollar) (3 marks) c) Prepare a classified partial balance sheet at April 30, 2011 to show the amortized cost bond investment and any associated interest. Use a proper three-line title. (2 marks) d) Prepare the journal entry(ies) required at June 30, 2011. (4 marks) e) How much total interest income would Smoke record over the entire term of the bond investment? (2 marks) If Smoke followed ASPE and used the straight line method to amortize bond discount, how much interest income would Smoke book over the entire term of the bond investment? (1 mark)