Question: On 1 August 20X4 Baker Company purchased 50 000 face

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

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  • CreatedFebruary 17, 2015
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