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Suppose Hector Wilson (HW) buys $800,000 of Amexon bonds at a price of 106. The Amexon...

Suppose Hector Wilson (HW) buys $800,000 of Amexon bonds at a price of 106. The Amexon bonds pay cash interest at the annual rate of 7% and mature at the end of 5 years. Journalize the following on Hector Wilson’s books:

a) Purchase of the bond investment on January 2, 2019. Hector Wilson expects to hold the investment to maturity

b) Receipt of annual cash interest on December 31, 2019

c) Amortization of the bonds on December 31, 2019. Use the effective interest of 6.5% to amortize the investment

d) Collection of the investment’s face value at the maturity date on January 2, 2024. (Assume the receipt of 2023 interest and amortization of bonds for 2023 have already been recorded, so ignore these entries)

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ekkarill92 answered 2 years ago
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