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How to prepare journal entry to record the purchase of bonds

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Reference no: EM132574487

On January 1, 2018, Final Company purchased 7% bonds having a maturity value of $100,000 for $108,660. The bonds provide the bondholders with a 5% yield. They are dated January 1, 2018 and mature January 1, 2023, with interest receivable December 31 of each year. Final Company's business model is to hold these bonds to collect contractual cash flows.

Question 1. Prepare the journal entry to record the purchase of bonds.

Question 2. Prepare bond amortization schedule.

Question 3. Prepare the journal entry to record the interest received and the amortization for 2018.

Question 4. Prepare the journal entry to record the interest received and the amortization for 2019.

Reference no: EM132574487

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