Question: On January 1 Year 1 the Gatrong Corporation purchased 12
On January 1, Year 1, the Gatrong Corporation purchased 12%, five-year Fleming Corporation bonds with a face value of $200,000. It expects to hold these bonds until maturity. The bonds pay interest semiannually on June 30 and December 31. Gatrong paid $215,443, a price that yields a 10% effective annual interest rate. Prepare the journal entry of Gatrong to record the purchase of the bonds.
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