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Prepare the journal entry at the date of the bond purchase

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Question - On January 1, 2017, Buffalo Company purchased 8% bonds having a maturity value of $360,000, for $390,329.57. The bonds provide the bondholders with a 6% yield. They are dated January 1, 2017, and mature January 1, 2022, with interest receivable January 1 of each year. Buffalo Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category.

Required -

a) Prepare the journal entry at the date of the bond purchase.

b) Prepare a bond amortization schedule.

c) Prepare the journal entry to record the interest revenue and the amortization at December 31, 2017.

Reference no: EM131592621

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