Using the data presented in BE16.5, assume Strand Corp. is a public company and that it purchased Hydrocor’s bonds at par for trading purposes. Prepare the journal entries to record

(a) the purchase of the bonds on June 30, 2021;

(b) The receipt of the first interest payment on December 31, 2021;

(c) Any required adjusting journal entries on December 31, 2021.

BE16.5

July 1, 2021, Moon Corporation, a private company, purchased $400,000 of sixyear, 6% Star Corporation bonds for $420,000. The bonds pay interest each June 30. The bonds were purchased to earn interest and the market interest rate at the time of purchase was 5%. The company uses the effective-interest method to amortize any premium or discount on debt security investments. Prepare the required journal entries on July 1 and December 31, 2021, and June 30, 2022.