Question: Interest Exercise Issue 10 year, 7%, $10,000 bond Interest is paid semiannually Yield = 6% 1. Record all journal entries for the first year (3/1/x1

Interest Exercise

Issue 10 year, 7%, $10,000 bond
Interest is paid semiannually
Yield = 6%

1. Record all journal entries for the first year (3/1/x1 - 12/31/x1) on the books of the investor under the assumption that the investor plans to hold the investment until maturity (i.e., reports the investment at amortized cost).

Hint:Do not use a premium or discount account. Amortize discounts and premiums as a direct adjustment to the Investment in Bonds account.

2. Describe what the investor will report (give category and dollar amounts) in the balance sheet and income statement at 12/31/x1.

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