Reference no: EM132920295

On January 1, 2021, Hoist Up Company(HUC) purchased bonds of Southern Inc. that had the following characteristics: 12% coupon rate, $300,000 face value, maturing on December 31, 2025, and interest paid annually on December 31. The bonds were purchased by HUC for$311,087.69.The fair value of the bonds at December 31, 2021was $320,500. The fair value of the bonds at December 31, 2022was $309,800. The bonds are not considered to be impaired.

REQUIRED

Problem 1: What was the effective yield on these bonds?

Problem 2: Prepare bond amortization table for this bond investment.

Problem 2: Assume that HUC accounts for these bonds using the amortized cost method. Prepare journal entries for the following dates using the net method (round to the nearest dollar):

(a) January 1, 2021;

(b) December 31, 2021; and

(c) December 31, 2022.