Mask Corporation purchased, as a held-to-maturity investment, $40,000 of the 8%, 5-year bonds of Phantasy Star, Inc.

Question:

Mask purchased, as a held-to-maturity investment, $40,000 of the 8%, 5-year bonds of Phantasy Star, Inc. for $43,412, which provides a 6% return. The bonds pay interest semiannually. Prepare Mask’s journal entries for
(a) The purchase of the investment, and
(b) The receipt of semiannual interest and premium amortization. Assume effective-interest amortization is used.

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...