Otter Creek Co owns vast amounts of corporate bonds
Otter Creek & Co. owns vast amounts of corporate bonds. Suppose Otter Creek buys $1,200,000 of RoastCo bonds at face value on January 2, 2016. The RoastCo bonds pay interest at the annual rate of 3% on June 30 and December 31 and mature on December 31, 2020. Otter Creek intends to hold the investment until maturity.
1. How would the bond investment be classified on Otter Creeks December 31, 2016, balance sheet?
2. Journalize the following on Otter Creek’s books:
a. Receipt of final interest payment on December 31, 2020
b. Disposal of the investment at maturity on December 31, 2020
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