An investor purchased bonds and intends to hold them until the maturity date which is 10 years into the future. The bonds were purchased at a discount and pay interest semiannually. Which journal entry or entries is(are)needed at each interest date?

Question

Quizplus · Accepted Answer

The investor needs to record both the receipt of interest revenue and the amortization of the bond discount at each interest date. The interest revenue is recorded as it is received, and the bond discount is amortized over the life of the bond to adjust the carrying amount of the bond to its face value by maturity.

An Investor Purchased Bonds and Intends to Hold Them Until