Refer to Exercise, the Mile Down & Co. investment in CocoCorp bonds. In Exercise Mile Down &

Question:

Refer to Exercise, the Mile Down & Co. investment in CocoCorp bonds.

In Exercise Mile Down & Co. owns vast amounts of corporate bonds. Suppose Mile Down buys $ 900,000 of CocoCorp bonds at face value on January 2, 2014. The CocoCorp bonds pay interest at the annual rate of 5% on June 30 and December 31 and mature on December 31, 2018. Mile Down intends to hold the investment until maturity.

Requirements

1. How would the bond investment be classified on Mile Down’s December 31, 2014, balance sheet?

2. Journalize the following on Mile Down’s books:

a. Receipt of final interest payment on December 31, 2018

b. Disposal of the investment at maturity on December 31, 2018

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... Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...