Tudor Company acquired $500,000 of Carr Corporation bonds for$487,706.69 on January 1, 2018. The bonds carry an 11% statedinterest rate, pay interest semiannually on January 1 and July 1,were issued to yield 12%, and are due January 1, 2021.
Required:
| 1. | Prepare an investment interest income and discount amortizationschedule using the: |
| a. | straight-line method |
| b. | effective interest method |
| 2. | Prepare the July 1, 2020, journal entries to record theinterest income under both methods. Prepare an investment interest income and discount amortizationschedule using the straight-line method. AdditionalInstructions TUDOR COMPANY | Bond Investment Interest Income and Discount AmortizationSchedule | Straight-Line Method |
1 | Date | Cash Debit | Investment in Debt Securities Debit | Interest Income Credit | Carrying Value of Debt Securities | 2 | 01/01/18 | | | | | 3 | 07/01/18 | | | | | 4 | 01/01/19 | | | | | 5 | 07/01/19 | | | | | 6 | 01/01/20 | | | | | 7 | 07/01/20 | | | | | 8 | 01/01/21 | | | | |
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This is the only one I am having trouble with. Its the preparingthe investment income and discount amortization schedule usingstraight-line method.
