On January 1, 2014, Liu Corporation paid $241,960 to acquire bonds of Peverdo with a par value

Question:

On January 1, 2014, Liu paid $241,960 to acquire bonds of Peverdo with a of $240,000. The annual contract rate on the bonds is 6% and interest is paid semi-annually on June 30 and December 31. The bonds mature after three years. The market rate of interest was 5.7%. Liu intends to hold the bonds until maturity.

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

Corporation
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... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...