Mercer Corporation acquired $400,000 of Park Companys bonds on June 30, 2018, for $409,991.12. The bonds carry
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Question:
Mercer Corporation acquired $400,000 of Park Company’s bonds on June 30, 2018, for $409,991.12. The bonds carry a 12% stated interest rate and pay interest semiannually on June 30 and December 31. The appropriate market interest rate is 11%, and the bonds are due June 30, 2021.
Required:
1. Prepare an investment interest income and premium amortization schedule, using the:
a. straight-line method
b. effective interest method
2. Prepare journal entries to record the December 31, 2018, and December 31, 2020, interest receipts using both methods.
Related Book For
Intermediate Accounting Reporting and Analysis
ISBN: 978-1337788281
3rd edition
Authors: James M. Wahlen, Jefferson P. Jones, Donald Pagach
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