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Calculate the present value of this bond investment

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Reference no: EM132765342

Question - GBC Corp. bought a $10,000 8% bond from Humber Inc. on January 1, 2019. It matures on December 31, 2021 Interest rates in the market are currently 10% and it is management's intent to hold this long term investment to maturity

Required -

a) Calculate the present value of this bond investment.

b) Prepare an amortization table for the life of this bond.

c) Prepare the journal entries required to record: i) the bond purchase ii) the annual interest payments iii) The repayment at the end.

d) Now assume that the bond was acquired as a FV-NI investment

The Fair Market Value (FMV) at the end of each year was:

2019 $9,900 2020 $9,600

i) Prepare the journal entries required at the end of each year to reflect the gain or loss due to the FMV process using a Tee (ledger) account to organize your answer.

Reference no: EM132765342

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