(Answered) Problemon january 1 2014 green bean casserole purchased 5

Accounting

Problem

On January 1, 2014, Green Bean Casserole purchased 5% bonds, having a maturity value of $500,000, for $428,938. The bonds provide the bondholders with a 7% yield. They are dated January 1, 2014, and mature January 1, 2024, with interest receivable June 30 and December 31 of each year. Green Bean Casserole uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category.

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

(b) Prepare the first 3 years of a bond amortization schedule.

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