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Prepare journal entries to record the investment in bonds

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Question - Houston Graphics purchased $ 1,000,000 bonds carrying 12% interest per annum paid June 1 and December 1 every year for 10 years, thereafter bonds would be matured and returned against par value. The financial year end of the company is 31st December every year. Consider each case as an independent one:

Case A: Purchased bonds at par value of $ 100.

Case B: Purchased bonds at discount of 5% i.e. at $95.

Case C: Purchased bonds at premium of 7% i.e. at $107.

Required - Prepare journal entries to record the above investment in bonds. Round off the values to nearest dollars.

Reference no: EM132535609

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