Investment in debt securities at a premium
On April 1, 2020, Margarita Corp. purchased 6%, $ 120,000 (par value) bonds for $ 124,725 plus accrued interest. Interest is paid on July 1 and January 1 and the bonds mature on July 1, 2025. Margarita uses the amortized cost model to account for this investment, and intends to hold the bonds to maturity. Margarita Corp. follows ASPE.
Instructions
a) Prepare the journal entry to record the purchase.
b) The bonds are sold on November 1, 2021 at 103 plus accrued interest. Amortization was recorded when interest was received by the straight-line method. Prepare all entries required to properly record the sale. Round values to the nearest dollar, if necessary.

Question

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The Answer of  Investment in debt securities at a premium
On April 1, 2020, Margarita Corp. purchased 6%, $ 120,000 (par value) bonds for $ 124,725 plus accrued interest. Interest is paid on July 1 and January 1 and the bonds mature on July 1, 2025. Margarita uses the amortized cost model to account for this investment, and intends to hold the bonds to maturity. Margarita Corp. follows ASPE.
Instructions
a) Prepare the journal entry to record the purchase.
b) The bonds are sold on November 1, 2021 at 103 plus accrued interest. Amortization was recorded when interest was received by the straight-line method. Prepare all entries required to properly record the sale. Round values to the nearest dollar, if necessary.

Investment in Debt Securities at a Premium