On January 1, 2014, Hmart Company purchased 5% bonds, having a maturity value of $500,000,...
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On January 1, 2014, Hmart Company purchased 5% bonds, having a maturity value of $500,000, for $428,938. The bonds provide the bondholders with a 7% yield. They are dated January 1, 2014, and mature January 1, 2024, with interest receivable June 30 and December 31 of each year. H-mart Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category. (a) Prepare the journal entry at the date of the bond purchase. (b) Prepare the first 3 years of a bond amortization schedule. (Hint: start with a complete amartization schedule/table) (c) Prepare the journal entries to record the interest received and the amortization for 2014.
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