On 1 August 20X4, Baker Company purchased $ 50,000 face amount of Sugar Company 6% coupon value

Question:

On 1 August 20X4, Baker Company purchased $ 50,000 face amount of Sugar Company 6% value bonds for $ 43,200. The market interest rate was 8% on this date. The bond pays interest semi- annually on 31 July and 31 January. At the fiscal year- end for Baker, the bonds have a fair value of $ 45,000. Show the journal entries
(a) To record the investment and
(b) To record investment revenue and any other needed adjustments at 31 December. The investment is classified as an amortized cost investment and the effective- interest amortization method is used. Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a...