On May 1, 2014, Gigajoule Company paid $180,000 to purchase $200,000 of bonds that carry a 5% contract rate of interest and will mature in 5 years from the date of purchase. Interest on the bonds is paid May 1 and November 1 of each year. Gigajoule Company is a private company that prepares its financial statements in accordance with ASPE. It plans to hold the bonds until maturity and amortizes the premium or discount on bonds using the straight-line method each interest payment date. As of December 31, 2014, the bonds had a market value of $185,000.
a. Prepare all necessary journal entries for 2014 dealing with the investment in bonds.
b. Show how the bonds would be presented on the balance sheet dated December 31, 2014.

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The Answer of On May 1, 2014, Gigajoule Company paid $180,000 to purchase $200,000 of bonds that carry a 5% contract rate of interest and will mature in 5 years from the date of purchase. Interest on the bonds is paid May 1 and November 1 of each year. Gigajoule Company is a private company that prepares its financial statements in accordance with ASPE. It plans to hold the bonds until maturity and amortizes the premium or discount on bonds using the straight-line method each interest payment date. As of December 31, 2014, the bonds had a market value of $185,000.
a. Prepare all necessary journal entries for 2014 dealing with the investment in bonds.
b. Show how the bonds would be presented on the balance sheet dated December 31, 2014.

On May 1, 2014, Gigajoule Company Paid $180,000 to Purchase