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Prepare the journal entry at the date of the bond purchase

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Question - On January 1, 2020, B Inc. purchased 7% bonds having a maturity value of $506,000 for $523,531.74. The bonds provide the bondholders with an 6% yield. The bonds are dated January 1, 2020, and mature January 1, 2024, with interest receivable on January 1 of each year. Blossom, Inc. uses the effective interest method to allocate unamortized discount or premium. The bonds are classified as available-for-sale. The fair value of the bonds at December 31 of each year-end is as follows.

2020 $515,600

2021 $516,500

2022 $511,400

2023 $506,000

Required - Prepare the journal entry at the date of the bond purchase.

Reference no: EM132910130

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