b. Record the entry for the purchase of the bonds by West Company on July 1. Date Account Name Debit Credit Jul. 1, Year 1 To record investment purchase.
On July 1 of the current year, West Company purchased for cash, 40, $10,000 bonds of North Corporation at a market rate of 6%. The bonds pay 5% interest, payable on a semiannual basis each July 1 and January 1, and mature in three years on July 1. The bonds are classified as trading securities. The annual reporting period ends December 31. Assume the effective interest method of amortization of any discounts or premiums. Ignore income taxes.
Note: When answering the following questions, round answers to the nearest whole dollar.
- Amortization Schedule
Journal Entries in Year 1- Journal Entries in Year 2
b. Record the entry for the purchase of the bonds by West Company on July 1.
| Date | Account Name | Debit | Credit |
|---|---|---|---|
| Jul. 1, Year 1 |
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| To record investment purchase. |
c. Record the
| Date | Account Name | Debit | Credit |
|---|---|---|---|
| Dec. 31, Year 1 |
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| To accrue interest revenue. | |||
| Dec. 31, Year 1 |
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| To record unrealized gain or loss. |
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