Problem #$2$

Investment in Bonds $($HTM Securities$)$ HW

On Jan. $1,2023$ Philo Kvetch purchased $750$ bonds @ $$979\mathrm{.}61$ per bond.

The new bond issue was priced such that the bonds have an yield $($annual$)$ of $5\mathrm{.}2\%$

The bond $($annual coupon$)$ rate is $4\mathrm{.}8\%$ over the $6-$year term of the bonds.

The bonds pay interest semi$-$annually.

$1-$Jan$-23$

Prepare the entry for the purchase of the bonds

Dr

$$

$30-$Jun$-23$

Prepare the entry for the first semi$-$annual receipt

of interest and amortization using the effective

interest method.

Dr

Cr

$31-$Dec$-23$

Prepare the entry for the second semi$-$annual receipt

of interest and amortization using the effective interest method.

Dr

Cr

$30-$Jun$-23$

Prepare the entry for the first semi$-$annual receipt

of interest and amortization using the straight line method.

Dr

Cr

$31-$Dec$-23$

Prepare the entry for the second semi$-$annual receipt of interest and amortization using the straight line

method.

Dr

Cr