Question: On January 1 , 2 0 2 4 , Parker Inc. purchased $ 1 0 0 , 0 0 0 of Amy Company bonds at

On January

1, 2024,

Parker Inc. purchased $

100, 000

of Amy Company bonds at a discount of $

5, 000 .

The

Amy bonds pay

6 %

interest but were purchased when the market interest rate was

7 %

for bonds of

similar risk and maturity. The bonds pay interest semiannually on June

30

and December

31

of each

year. On December

31, 2024,

the bonds have a fair value of $

90, 000 .

1 .

Assume Parker accounts for the bonds as a held

-

-

maturity investment and uses the effective

interest method. How would Parker report these bonds on its

2024

Balance Sheet, Income

Statement and Statement of Cashflow?

2 .

Continuing from question

1,

assume Parker sold the bonds on January

1, 2025,

for $

96, 000 .

Please journalize this transaction.

3 .

Instead, Assume Parker accounts for the bonds as a trading investment and uses the effective

interest method. How would Parker report these bonds on its

2024

Balance Sheet, Income

Statement and Statement of Cashflow?

4 .

Continuing from question

3,

assume Parker sold the bonds on January

1, 2025,

for $

96, 000 .

Please journalize this transaction.

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