Textbook Problem

Purchase, Premium Amortization, and Sale of Bond Investment Glover Corporation purchased bonds with a face value of $300,000 for $307,493.34 on January 1, 2019. The bonds carry a face rate of interest of 12%, pay interest semiannually on June 30 and December 31, were purchased to be held to maturity, are due December 31, 2021, and were purchased to yield 11%. On January 1, 2020, in contemplation of a major acquisition, the bonds were sold for $300.000. Glover uses the effective interest method.

Required:

1. 1. Prepare journal entries to record the purchase of the bonds, the first two interest receipts, and the sale of the bonds.
2. 2. Next Level Discuss the considerations involved when held-to-maturity debt securities are sold prior to their maturity date.