On January 1, 2017, Phantom Corp. acquires $300,000 of Spider Products, Inc. 9% bonds at a price

Question:

On January 1, 2017, Phantom Corp. acquires $300,000 of Spider Products, Inc. 9% bonds at a price of $278,384. The interest is payable each December 31, and the bonds mature on December 31, 2019. The investment will provide Phantom Corp. with a 12% yield. Phantom Corp. applies IFRS and accounts for this investment using the amortized cost model.

Instructions:

a) Prepare a three-year bond amortization schedule, rounding to the nearest dollar.

b) Prepare the journal entry to record interest received and interest income on December 31, 2018.

(c) Prepare the journal entries to record interest received and interest income on December 31, 2019, and the maturity of the bond.

(d) Prepare the entry for the disposal of the investment if Phantom had sold the bond on December 31, 2018, for $285,270 instead of holding it to maturity. Assume that 2018 interest received and interest income have already been recorded.

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...