On March 31, 2014, Kingpin Corp. paid 98.25 for 4-percent bonds of Quest Limited as an investment.

Question:

On March 31, 2014, Kingpin Corp. paid 98.25 for 4-percent bonds of Quest Limited as an investment. The maturity value of the bonds is $100,000 at September 30, 2018; they pay interest on March 31 and September 30. At December 31, 2014, the bonds' market value is 99.25. The company plans to hold the bonds until they mature.

Required

1. How should Kingpin Corp. account for the bonds?

2. Using the straight-line method of amortizing the discount, journalize all transactions on the bonds for 2014.

3. Show how the investment would be reported by Kingpin Corp. on the balance sheet at December 31, 2014.

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... 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...