Record the purchase of the Jackson bonds

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Question - On January 1, 2020, Tara, Inc. purchased $100,000 of Jackson Corporation bonds at a price of $95,000. The Jackson bonds pay 6% interest, but were purchased when the market interest rate for bonds of similar risk and maturity was 7%. The bonds pay interest semiannually on June 30 and December 31 of each year. Tara accounts for these bonds as a held-to-maturity security and uses the effective-interest method.

Required - Prepare the necessary general journal entries to record the purchase of the Jackson bonds, the June 30 interest payment and discount amortization and the December 31 interest payment and discount amortization.

Reference no: EM132535519

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