Prepare a 3-year schedule of interest revenue and bond, Ask an Expert

Accounting

On January 1, 2010, Morgan Company acquires $300,000 of Nicklaus, Inc., 9% bonds at a price of $278,384. The interest is payable each December 31, and the bonds mature December 31, 2012. The investment will provide Morgan Company a 12% yield. The bonds are classified as held-to-maturity.
Instructions

(a) Prepare a 3-year schedule of interest revenue and bond discount amortization, applying the straight-line method. (Round to nearest dollar.)

(b) Prepare a 3-year schedule of interest revenue and bond discount amortization, applying the effective- interest method. (Round to nearest cent.)

(c) Prepare the journal entry for the interest receipt of December 31, 2011, and the discount amorti- zation under the straight-line method.

(d) Prepare the journal entry for the interest receipt of December 31, 2011, and the discount amorti- zation under the effective-interest method

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