On January 1, 2012, Roosevelt Company purchased 12% bonds, having a maturity value of $500,000, for $537,907.40.

Question:

On January 1, 2012, Roosevelt Company purchased 12% bonds, having a value of $500,000, for $537,907.40. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2012, and mature January 1, 2017, with interest receivable December 31 of each year. Roosevelt’s business model is to hold these bonds to collect contractual cash flows.
Instructions
(a) Prepare the journal entry at the date of the bond purchase.
(b) Prepare a bond amortization schedule.
(c) Prepare the journal entry to record the interest received and the amortization for 2012.
(d) Prepare the journal entry to record the interest received and the amortization for 2013.

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...