Reference no: EM132437552
Question - Amortized Cost Model
Mahco Financial began operations in 2018 and invests in bonds to be held to maturity. On January 1, 2018, Mahco acquired a $1,200,000 9.00% bond (yield 8.60%) due December 31, 2037, issued by JJK for $1,248,000. Interest is paid semiannually on June 30 and December 31. On January 1, 2018, Mahco acquired a $2,000,000 3.00% bond (3.28% yield) due July 1, 2028, issued by MMM for $1,960,000. Interest is paid semiannually on June 30 and December 31.
Prepare the journal entries to record the carrying value for the bonds at December 31, 2018, using the straight-line method of amortization for bond discount and premium. Include all other entries that are required for 2018.