The Glover Corporation purchased bonds with a face value of $300,000 for $307,493.34 on January 1, 2007.

Question:

The Glover Corporation purchased bonds with a face value of $300,000 for $307,493.34 on January 1, 2007. The bonds carry a face rate of interest of 12%, pay interest semiannually on June 30 and December 31, were purchased to be held to maturity, are due December 31, 2009, and were purchased to yield 11%. On January 1, 2008, in contemplation of a major acquisition, the bonds were sold for $300,000. The company uses the effective interest method.

Required

Prepare journal entries to record the purchase of the bonds, the first two interest receipts, and the sale of the bonds.

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...