Question 1 Bond Investments
On January 1, 2023, Phantom Corp. acquires $300,000 of Spider Products, Inc. 9% bonds at a price of $278,384. The interest is payable each December 31, and the bonds mature on December 31, 2025. The investment will provide Phantom Corp. with a 12% yield. Phantom Corp. applies IFRS and accounts for this investment using the amortized cost model.
Instructions: a) Prepare a three-year bond amortization schedule, rounding to the nearest dollar. Note: USE Excel for linking the numbers and use formulas in Excel for any calculations.
Schedule of Interest Income and Bond Discount Amortization
Effective Interest Method
9% Bond Purchased to Yield 12%
	Date	Cash Received	Interest Income	Bond Discount Amortization	Carrying Amount of Bonds
b) Prepare the journal entry to record interest received and interest income on December 31, 2024. Note: USE Excel for linking the numbers and use formulas in Excel for any calculations.
Date					Debit	Credit
(c) Prepare the journal entries to record interest received and interest income on December 31, 2025, and the maturity of the bond. Note: USE Excel for linking the numbers and use formulas in Excel for any calculations.
Date					Debit	Credit
Alternatively, the entries could be combined in one compound entry:
(d) Prepare the entry for the disposal of the investment if Phantom had sold the bond on December 31, 2024, for $285,270 instead of holding it to maturity. Assume that 2024 interest received and interest income have already been recorded. Note: USE Excel for linking the numbers and use formulas in Excel for any calculations.
Date					Debit	Credit