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Prepare the investment interest income

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Complete the following questions. In addition to answering the items below, you must submit an analysis of the assignment. Analyze the specific outcomes and write a analysis directed toward the team at BAJA Corporation describing what the numbers mean and how they relate to the business. On January 1, 2017, BAJA Corporation purchased bonds with a face value of $600,000 for $616,747.06 The bonds are due June 30, 2020, carry a 13% stated interest rate, and were purchased to yield 12%. Interest is payable semiannually on June 30 and December 31. On March 31, 2018, in contemplation of a major acquisition, the company sold one-half the bonds for $319,000 including accrued interest; the remainder were held until maturity.

Question 1: Prepare the investment interest income and bond premium amortization schedule using the effective interest method.

Question 2: Prepare the journal entries to record the purchase of the bonds.

Question 3: Prepare the journal entries to record each interest payment.

Question 4: Prepare the journal entries to record the partial sale of the investment on March 31, 2018, and the retirement of the bond issue on June 30, 2020.

Reference no: EM132469864

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