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Prepare the journal entry for the interest revenue

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Question - On January 1, 2020, Sunland Company acquires $230,000 of Spiderman Products, Inc., 8% bonds at a price of $202,847. Interest is received on January 1 of each year, and the bonds mature on January 1, 2023. The investment will provide Sunland Company a 13% yield. The bonds are classified as held-to-maturity.

(a) Prepare a 3-year schedule of interest revenue and bond discount amortization, applying the straight-line method.

(b) Prepare a 3-year schedule of interest revenue and bond discount amortization, applying the effective-interest method.

(c) Prepare the journal entry for the interest revenue and discount amortization under the straight-line method at December 31, 2021.

(d) Prepare the journal entry for the interest revenue and discount amortization under the effective-interest method at December 31, 2021.

Reference no: EM132603838

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