Question: On April 1 2014 JoeLite Corporation paid 851 560 to acquire

On April 1, 2014, JoeLite Corporation paid $851,560 to acquire bonds of Luxem Inc. with a par value of $860,000. The annual contract rate on the bonds is 6.5% and interest is paid quarterly beginning June 30, 2014. The bonds mature in six years. The market rate of interest at the time of purchase was 6.7%. JoeLite Corporation plans to hold the bonds until they mature.

1. Prepare an amortization schedule for the investment showing only 2014.
2. Prepare JoeLite’s entries to record:
(a) The purchase of the bonds, and
(b) The receipt of the first three interest payments.
3. Show how the investment will appear on the December 31, 2014, balance sheet.

Sale on SolutionInn
  • CreatedJanuary 08, 2015
  • Files Included
Post your question