Glover Corporation purchased bonds with a face value of $300,000 for $307,493.34 on January 1, 2019. The

Question:

Glover Corporation purchased bonds with a face value of $300,000 for $307,493.34 on January 1, 2019. The bonds carry a face rate of interest of 12%, pay interest semiannually on June 30 and December 31, were purchased to be held to maturity, are due December 31, 2021, and were purchased to yield 11%. On January 1, 2020, in contemplation of a major acquisition, the bonds were sold for $300,000. Glover uses the effective interest method.

Required:
1. Prepare journal entries to record the purchase of the bonds, the first two interest receipts, and the sale of the bonds.
2. Next Level Discuss the considerations involved when held-to-maturity debt securities are sold prior to their maturity date.

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...

Fantastic news! We've Found the answer you've been seeking!