Suppose Hale and Sons purchases $800,000 of 44% annual bonds of Hammond Corporation at face value on January 1, 2018. These bonds pay interest on June 30 and December 31 each year. They mature on December 31, 2021. Hale intends to hold the Hammond bond investment until maturity.

Requirement 1.

Journalize Hale and Sons's transactions related to the bonds for 2018. Begin by journalizing the investment on January 1, 2018.

Date			Accounts and Explanation	Debit	Credit
2018
Jan. 1			Held-to-Maturity Debt Investments
			Cash
			Purchased investment in bonds.

Next, journalize the receipt of cash interest on June 30, 2018.

Date			Accounts and Explanation	Debit	Credit
2018
Jun. 30			Cash
			Interest Revenue
			Received cash interest.

Journalize the receipt of cash interest on December 31, 2018.

Date			Accounts and Explanation	Debit	Credit
2018
Dec. 31			Cash
			Interest Revenue
			Received cash interest.

Requirement 2.

Journalize the entry required on the bonds maturity date. (Assume the last interest payment has already been recorded.) (Record debits first, then credits. Select the explanation on the last line of the journal entry table.)

Date			Accounts and Explanation	Debit	Credit
2021
Dec. 31			Cash
			Held-to-Maturity Debt Investments
			Disposed of bond at maturity.