$\mathrm{}$Foster Company purchased $$1,200,000$ of $8\%,5-$year bonds from Carlin, Inc. on January $1,2023,$ with interest payable on July $1$ and December $31.$ The bonds sold for $$1,249,896$ at an effective interest rate of $7\%.$ The fair value of the bond at year$-$end was $$1,230,000.$  

 

a$.$ Using the effective interest method, prepare the purchase of the bonds and the first two interest payments received.

b$.$ Assume the bond is categorized as available for sale, prepare the year$-$end adjustment on December $31.$

Answer rating: 100% (QA)

a To prepare the purchase of the bonds and the first two interest payments received using the effect... View the full answer