Return to Starter 16-11 , the Heinz Ltd. investment in Kuzawa Corporation bonds. Journalize the following transactions

Question:

Return to Starter 16-11 , the Heinz Ltd. investment in Kuzawa Corporation bonds. Journalize the following transactions on Heinz Ltd.'s books, along with an explanation:

a. Purchase of the bond investment on January 2, 2014. As Heinz Ltd. expects to hold the investment to maturity, it is classified as a long term investment.

b. Receipt of the annual cash interest on December 31, 2014.

c. Amortization of the discount on December 31, 2014.

d. Collection of the investment's face value at its maturity date on December 31, 2018. (Assume that the interest and amortization of discount for 2018 have already been recorded, so you may ignore these entries.)

Data From Starter 16-11

Heinz Ltd. owns vast amounts of corporate bonds. Suppose the company buys $1,000,000 of Kuzawa Corporation bonds on January 2, 2014, at a price of 97. The Kuzawa bonds pay cash interest at the annual rate of 6 percent and mature on December 31, 2018.

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... Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the... 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...