On January 1, 2020, Marigold, Inc. purchased 9% bonds having a
maturity value of $493,000 for $509,329.00. The bonds provide the
bondholders with an 8% yield. The bonds are dated January 1, 2020,
and mature January 1, 2024, with interest receivable on January 1
of each year. Marigold, Inc. uses the effective interest method to
allocate unamortized discount or premium. The bonds are classified
as available-for-sale. The fair value of the bonds at December 31
of each year-end is as follows.
1. Prepare the journal entry at the date of the bond purchase.
2. Prepare the journal entries to record the interest revenue and recognition of fair value for 2020.
3. Prepare the journal entry to record the recognition of fair value for 2021.
Get Answers For Free
Most questions answered within 1 hours.