Using the straight-line method of amortization

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Reference no: EM13748580

On the first day of the current fiscal year, Smith Co. purchased at a discount $5,000,000 of 10-year, 11% Jones bonds, with interest payable of 5.5% semi-annually. The bonds were purchased for $4,800,000 which is $200,000 below par value since the bond investment paid a lower interest rate than other corporations on 1/1/13. An investor does not record a Discount on Investment

Present entries to record the following transactions on Smith Co. books for the current fiscal year:

A. Purchase of the bond investment.

B. First semi-annual interest receipt on 6/30/13.

C. Second semi-annual interest receipt on 12/31/13.

D. Amortization of bond discount for one year, using the straight-line method of amortization.

Reference no: EM13748580

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