Business, 06.03.2020 07:06 cambamm12

On January 1, 2019, Kelly Corporation acquired bonds with a face value of $500,000 for $483,841.79, a price that yields a 10% effective annual interest rate. The bonds carry a 9% stated rate of interest, pay interest semiannually on June 30 and December 31, are due December 31, 2022, and are being held to maturity.

1. Prepare journal entries to record the purchase of the bonds and the first two interest receipts using the straight-line method of amortization. If required, round your answers to the nearest cent. For compound entries, if an amount box does not require an entry, leave it blank.

June 30 entry

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Answer from: bbysl15

Debt Securities Investment 493,841.79 debit

Discount on D-S Investment 6,158.21 debit

Cash 500,000 credit

--to record bonds purchase--

Cash 22,500 debit

Discount on D-S Investment 769.78 credit

Interest revenue 21,730.22‬ credit

--to record first interest collection--

Interest receivables 22,500 debit

Discount on D-S Investment 769.78 credit

Interest revenue 21,730.22‬ credit

--to record second interest collection--

Explanation:

cost 493,841.79

face value 500,000.00

discount: 6,158.21‬

We divide this over the total payment left:

6,158.21 / 8 = 769,78

interest proceeds

500,000 x 9% / 2 = 22,500.00

amorization (769.78)

Interest revenue 21,730.22‬

Answer from: hiji0206

Explanation:

Face value = 500000

Discount = -16158.21

Fair Value = 483841.79

Amortization Schedule

year Amount Interest repay Closing

6 months 483841.79 0 22500 461341.79

6 months 461341.79 48384.2 22500 487225.96

investment in bond 483841.79

Cash 483841.79

To record the investment at amortized cost.

Cash 22500

Investment 22500

to record the semi annual interest payment

Cash 22500

Investment 25884.2

Interest Income 48384.2

Answer from: Quest

Because she is a liberal

Answer from: Quest

answer is a

explanation:

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On January 1, 2019, Kelly Corporation acquired bonds with a face value of $500,000 for $483,841.79,...

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