On January 1, 2020, 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, 2022. 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, 2021.

c. Prepare the journal entries to record interest received and interest income on December 31, 2022, 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, 2021 for $285,270 instead of holding it to maturity. Assume that 2021 interest received and interest income have already been recorded.