Reference no: EM132751375

On January 1, 2020, Willowing Birch Corporation, a company that follows IFRS, purchased newly issued bonds. The bonds matured on December 31, 2022, with semi-annual interest payments being made every June 30 and December 31. Willowing Birch had the intention and ability to hold the bonds until their maturity date. The bonds will be accounted for using the amortized cost model. Other information pertaining to Willowing Birch and its purchase of the bonds follows

Willowing Birch's year end date October 31, 2020

Face value of bonds       $1,386,000

Stated rate of interest   4%

Market rate of interest   6%

Required:

Problem a) Calculate the purchase price of the bonds.

Problem b) Prepare an amortization schedule for the bonds.

Problem c) Prepare any required journal entries on the books of Willowing Birch for each of the following dates:

January 1, 2020
June 30, 2020
October 31, 2020
December 31, 2020
December 31, 2022