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Prepare the journal entry at the date of the bond purchase

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Reference no: EM132868584

Question - Entries for Held-to-Maturity Securities - On January 1, 2020, Hi and Lois Company purchased 12% bonds having a maturity value of $300,000 for $322,744.44. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2020, and mature January 1, 2025, with interest received on January 1 of each year. Hi and Lois Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category.

Instructions -

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

b. Prepare bond amortization schedule.

c. Prepare the journal entry to record the interest revenue and the amortization at December 31, 2020.

d. Prepare the journal entry to record the interest revenue and the amortization at December 31, 2021.

Reference no: EM132868584

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