Question

On January 1, 2014, Phantom Corp. acquires $300,000 of Spider Products, Inc. 9% bonds at a price of 5278,384. The interest is payable each December 31, and the bonds mature on December 31, 2016. The investment will provide Phantom Corp. with a 12% yield. Phantom Corp. applies IFRS and accounts for this investment using the amortized cost model.
Instructions
(a) Prepare a three-year bond amortization schedule, rounding to the nearest dollar.
(b) Prepare the journal entry to record interest received and interest income on December 31, 2015.
(c) Prepare the journal entries to record interest received and interest income on December 31, 2016, and the maturity of the bond.
(d) If Phantom sold the bond on December 31, 2015, for $285,270 instead of holding it to maturity, prepare the entry for the disposal of the investment. Assun1e 2015 interest received and interest income have already been recorded.


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  • CreatedSeptember 18, 2015
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