On July 1, Sleepy, Inc. purchased 100 of Rabbit Co.'s 6%, $1,000 bonds. The bonds, which pay interest on March 1 and September 1, were purchased at 102 plus accrued interest to yield 4%. The investment was classified as held- to-maturity securities. Effective interest amortization is used.
Required:
Prepare journal entries for
a. July 1
b. September 1
c. December 31

Question

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The Answer of On July 1, Sleepy, Inc. purchased 100 of Rabbit Co.'s 6%, $1,000 bonds. The bonds, which pay interest on March 1 and September 1, were purchased at 102 plus accrued interest to yield 4%. The investment was classified as held- to-maturity securities. Effective interest amortization is used.
Required:
Prepare journal entries for
a. July 1
b. September 1
c. December 31