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Prepare the journal entry to record the purchase of the bond

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On January 1, 2021, Ledge Company issued 12% bonds dated January 1, with a face amount of $5,000,000. The bonds mature on Dec. 31, 2040 (20 years). For bonds of similar risk and maturity the market rate 10%. Interest is paid annually on December 31. Braxton Corporation purchased the entire bond issue. Ledge Company uses effective interest method and Braxton Corporation use straight line method for amortization of discount or premium.

Required:

For Braxton Corporation

Question a. Prepare the journal entry to record the purchase of the bonds on 1/1/21.

Question b. Prepare the journal entry to record the interest payment on 12/31/21

Reference no: EM132828166

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