On January 1, 2021, Space Sports Inc. purchased a 10 year, $ 100,000 bond, paying interest of 7% semi-annually every January 1 and July 1. The market rate of interest for similar bonds is 6%. Space has the intention of holding the bonds to maturity and earning interest income. The company follows IFRS and has a December 31 year end.
Instructions
a) Record the purchase of the bonds on January 1, 2021.
b) Record the first interest payment on July 1, 2021.
c) Prepare the necessary journal entry at year end to accrue interest income.
d) Record the interest payment on January 1, 2022.
Round all answers to the nearest dollar.

Question

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The Answer of On January 1, 2021, Space Sports Inc. purchased a 10 year, $ 100,000 bond, paying interest of 7% semi-annually every January 1 and July 1. The market rate of interest for similar bonds is 6%. Space has the intention of holding the bonds to maturity and earning interest income. The company follows IFRS and has a December 31 year end.
Instructions
a) Record the purchase of the bonds on January 1, 2021.
b) Record the first interest payment on July 1, 2021.
c) Prepare the necessary journal entry at year end to accrue interest income.
d) Record the interest payment on January 1, 2022.
Round all answers to the nearest dollar.