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Question: Monkey Technology purchased as a long-term investment $800,000 of 8% quoted bonds, dated January 1, on January 1, 2012. The management intent to hold the bonds until maturity. For bonds of similar risk and maturity the market yield was 10%. The price paid for the bonds was $660,000. Interest is received semiannually on June 30 and December 31.

Required: 1. Prepare an amortization schedule for the bonds at the effective rate for year 2012 and 2013.

2. Prepare all necessary journal entries in the year 2012.

3. Assume February 1, 2013 the company sells the bonds for $720,000, included interest. Prepare the journal entries on Feb 1, 2013.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M92712970

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