Ace Properties Ltd. purchased a five-year, 4.5 percent Scotia bond on May 1, 2017, and intends to hold it until it matures. The market rate at the time was 5.2 percent. Interest is paid annually each April 30. Information about the bond appears in the table below. Journalize the purchase and the April 30, 2018, entries. Use Exhibit 15-5 on page 852 as a guide. Assume there were no brokerage fees.

Transcribed Image Text:

Period Interest Discount Revenue Annual Interest Interest Revenue 4.50% Discount Bond Balance Carrying Value Period May 1, 20127 April 30, 201845,00050435 April 30, 2019 April 30, 2020 April 30, 2021 April 30, 2022 Total Amort. 50,717 51,015 51,327 51,606 $225,000 $255,100 45,000 45,000 45,000 45,000 $30,100 535 24,665 18,948 12,933 6,606 5,717 6,015 6,327 6,606 $30,100 $ 969,900 975,335 981,052 987,067 993,394 1,000,000