Question

On January 1, 2020, Whispering Company purchased 12% bonds having a maturity value of $390,000, for $419,567.77. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2020, and mature January 1, 2025, with interest received on January 1 of each year. Whispering Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category.

Required:
Prepare the journal entry at the date of the bond purchase. (Enter answers to 2 decimal places, e.g. 2,525.25.

Answer 1

1-Jan-2020

Dr Debt Investments (Held-to-Maturity) $419,567.77

Cr Cash $419,567.77

Step-by-step explanation:

Whispering Company Journal entry at the date of the purchase

1-Jan-2020

Dr Debt Investments (Held-to-Maturity) $419,567.77

Cr Cash $419,567.77