Carow Corporation purchased, as a held-to-maturity investment, $65,000 of the 10
ID: 2709560 • Letter: C
Question
Carow Corporation purchased, as a held-to-maturity investment, $65,000 of the 10%, 5-year bonds of Harrison, Inc. for $70,271, which provides a 8% return. The bonds pay interest semiannually. Prepare Carow’s journal entries for (a) the purchase of the investment, and (b) the receipt of semiannual interest and premium amortization. Assume effective-interest amortization is used. (Round answers to 0 decimal places, e.g. 2,500. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
Explanation / Answer
(a) the purchase of the investment, and
(b) the receipt of semiannual interest and premium amortization.
Account Title & Explaination Debit Credit Investment in Bonds 70271 Cash 70271