Question 1 (Investments Held-to-Maturity Securities)

On January 1, 2014, Brown Corporation purchases at par 10% bonds having a maturity value of $300,000. They are dated January 1, 2014 and mature January 1, 2019, with interest receivable December 31 of each year. The bonds are classified as held-to-maturity.

a. Prepare the journal entry at the date of the bond purchase.

b. Prepare the journal entry to record the interest receivable for 2014.

c. Prepare the journal entry to record the interest receivable for 2015.