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Question - On April 30, 2020, Investor Group purchased $1,000,000 (par value) 8%, 10-year bonds for $961,500 including accrued interest from the open market. The bonds were dated January 1, 2020. Interest is paid semi-annually on January 1 and July 1. The interest is calculated using the effective interest rate method for amortization of bond premiums and discounts.
Required - Assuming you are the Accounting Manager of the Investor Group,
a) Calculate the amount of accrued interest and provide detailed calculation.
b) Provide the recording of this acquisition on April 30, 2020.
c) Provide the recording of the bond interest received on July 1, 2020.
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