On 1/1/2009 ABC, INC. purchased a 5-year $1,000,000, 6% bond requiring semiannual interest payments from XYZ, Inc.
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On 1/1/2009 ABC, INC. purchased a 5-year $1,000,000, 6% bond requiring semiannual interest payments from XYZ, Inc. Interest payments are scheduled to occur on 6/30 and 12/31 each year. They classify this investment as "Trading." ABC, Inc. pays an amount for the bond that creates an effective yield of 5%.
Assuming that ABC, Inc. prepares its financial statements (balance sheet, income statement, etc.) on 12/31 each year, please prepare the journal entry on 6/30/2009 (when they receive the first interest payment)?
Related Book For
Introduction to Corporate Finance What Companies Do
ISBN: 978-1111222284
3rd edition
Authors: John Graham, Scott Smart
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