On January 1, 2024, for $17.2 million, Cenotaph Company purchased 8% bonds, dated January 1, 2024, with a face amount of $19.2 million. For bonds of similar risk and maturity, the market yield is 10%. Interest is paid semiannually on June 30 and December 31. Required: Prepare the journal entry to record interest on June 30, 2024, using the effective interest method. Prepare the journal entry to record interest on December 31, 2024, using the effective interest method.

On January 1, 2024, for $17.2 million, Cenotaph Company purchased 8% bonds, dated January 1, 2024, with a face amount of $19.2 million. For bonds of similar risk and maturity, the market yield is 10%. Interest is paid semiannually on June 30 and December 31. Required: Prepare the journal entry to record interest on June 30, 2024, using the effective interest method. Prepare the journal entry to record interest on December 31, 2024, using the effective interest method.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 1RE

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