Bond Securities On January 1, 2020, Hummer Company purchased 5% bonds, having a maturity value of $200,000. The bonds pr
Posted: Wed May 04, 2022 7:17 am
Bond Securities On January 1, 2020, Hummer Company purchased 5% bonds, having a maturity value of $200,000. The bonds provide the bondholders with a 6% yield. They are dated January 1, 2020, and mature January 1, 2025, with interest receivable on January 1 of each year. Hummer Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the available-for-sale category. Required: 1. Prepare the journal entry at the date of the bond purchase. 2. Prepare the journal entries to record the interest revenue and recognition of fair value of $ 194,500 as of December 31, 2020 3. Prepare the journal entry to record the interest revenue and the recognition of fair value of $ 195,750 as of December 31, 2022. The fair value of the bonds was $ 194,200 as of December 31, 2021.