On June 30, 20x4, you purchase $500,000 of bonds of Longstar Inc. The bonds mature on...

 

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On June 30, 20x4, you purchase $500,000 of bonds of Longstar Inc. The bonds mature on June 30, 20x19 and pay interest semi-annually on December 31 and June 30 at a rate of 3.5%. On June 30, 20x4 the bonds are trading to yield 3.1%. On June 30, 20x5, the bonds are trading to yield 3.4%. Required - Prepare all journal entries for the years 20x4 and 20x5 under the following assumptions: i) The bonds are classified as amortize cost investments (7 marks) On June 30, 20x4, you purchase $500,000 of bonds of Longstar Inc. The bonds mature on June 30, 20x19 and pay interest semi-annually on December 31 and June 30 at a rate of 3.5%. On June 30, 20x4 the bonds are trading to yield 3.1%. On June 30, 20x5, the bonds are trading to yield 3.4%. Required - Prepare all journal entries for the years 20x4 and 20x5 under the following assumptions: i) The bonds are classified as amortize cost investments (7 marks)