On January 1, 2017, Bucket Company purchased as an investment a $1200, 6% bond for $900. Bucket plans to hold the bond until the maturity date of January 1, 2027. The bond pays interest on January 1 and July 1. The company's fiscal year ends on December 31 and it uses the straight-line amortization method for discounts and premiums. The journal entry on December 31, 2017 is:

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The bond discount of $300 ($1200 - $900) is amortized over 10 years, resulting in $30 per year. For half a year, the amortization is $15. The interest revenue for the year is $36 (6% of $1200), and the entry records the interest receivable and amortization of the discount.

On January 1, 2017, Bucket Company Purchased as an Investment