On January $1,2022,$ Matrix, Inc. purchased as an investment

$$1,000,000,$ of $10\%,10-$year bonds in Chelsea Corp, interest paid semi$-$

annually $($at $6/30$ and $12/31).$ The market rate for similar bonds is

$12\%.$ They classify the bond as a held to maturity investment.

$1)$ What is the present value of the bond issue?

$2)$ What is the JE to record the purchase?

$3)$ What are the JEs to record the first and second interest

payments?

$4)$ What is the value of the investment on the balance sheet at

$12/31/2022?$

$5)$ On January $1,2023$ the bonds are sold for $$893,200$ cash. Record

the journal entry for the sale.

$6)$ What if we wait and hold them until maturity $($like the name

implies$)?$

Answer rating: 100% (QA)

1 The present value of the bond issue can be calculated using the present value formula for bonds PV ... View the full answer