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Prepare journal entries by Garcia to record purchase

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Question - On January 1, 2017, Garcia Company acquired bonds with a face value of $80,000 for $76,066. The bonds carry a stated interest rate of 8% and an effective yield of 9%. Interest is payable on June 30 and December 31, the bonds mature on December 31, 2018, and they are classified as held-to-maturity.

Required - Prepare the journal entries necessary by Garcia to record the purchase of bonds and the first two interest receipts using the effective interest method of amortization.

Reference no: EM132828149

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