On May 1,2017,a company paid $48,500 to purchase $50,000 of bonds that carry a 7% interest rate and will mature five years from the date of purchase.Interest on the bonds is paid May 1 and November 1 of each year.The company 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 31,2017,the bonds had a market value of $49,000.
a_Prepare all necessary journal entries for 2017 dealing with the investment
$\text { in bonds. Prepare the journal entry for the May 1, } 2018 \text { interest payment. }$ b_Show how the bonds would be presented on the balance sheet at December 31,2017.

Question

On May 1,2017,a company paid $48,500 to purchase $50,000 of bonds that carry a 7% interest rate and will mature five years from the date of purchase.Interest on the bonds is paid May 1 and November 1 of each year.The company 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 31,2017,the bonds had a market value of $49,000.
a_Prepare all necessary journal entries for 2017 dealing with the investment
 $\text { in bonds. Prepare the journal entry for the May 1, } 2018 \text { interest payment. }$ b_Show how the bonds would be presented on the balance sheet at December 31,2017.

Quizplus · Accepted Answer

The Answer of On May 1,2017,a company paid $48,500 to purchase $50,000 of bonds that carry a 7% interest rate and will mature five years from the date of purchase.Interest on the bonds is paid May 1 and November 1 of each year.The company 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 31,2017,the bonds had a market value of $49,000.
a_Prepare all necessary journal entries for 2017 dealing with the investment
 $\text { in bonds. Prepare the journal entry for the May 1, } 2018 \text { interest payment. }$ b_Show how the bonds would be presented on the balance sheet at December 31,2017.

On May 1,2017,a Company Paid $48,500 to Purchase $50,000 of Bonds