Record the journal entry for the purchased bond investment

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Question - On July 1, 2020 Blue Thunder Ltd. invested in a 6 year, 5%, $600,000 bond. The bond pays interest semi-annually every December 31 and June 30. The market rate of interest for this bond was 4% which resulted in a purchase price of $613,726. The company has a December 31st year end and will account for this investment using the amortized cost method because they intend to hold to maturity.

Required -

a) Record the journal entry for the purchased bond investment on July 1, 2020.

b) Record the journal entry for the receipt of interest on December 31, 2020.

c) Determine the amount reported on the balance sheet and state the appropriate classification for this investment as at December 31, 2020. This bond will be reported at $________ and will be classified as a ___________ on December 31, 2020.

Reference no: EM132793593

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