On January 1, 2007 the Kelly Corporation acquired bonds with a face value of $500,000 for $483,841.79,
Question:
On January 1, 2007 the Kelly Corporation acquired bonds with a face value of $500,000 for $483,841.79, a price that yields a 10% effective annual interest rate. The bonds carry a 9% stated rate of interest, pay interest semiannually on June 30 and December 31, are due December 31, 2010 and are being held to maturity.
Required
Prepare journal entries to record the purchase of the bonds and the first two interest receipts using:
1. The straight-line method of amortization.
2. The effective interest method of amortization.
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...
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1 2007 Jan 1 Investment in HeldtoMaturity Debt Securities 48384179 Cash 48384179 June 30 Cash 500000 ...View the full answer
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Related Book For 
Intermediate Accounting
ISBN: 978-0324300987
10th Edition
Authors: Loren A Nikolai, D. Bazley and Jefferson P. Jones
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