On September 30,2017,First Company paid Second Company $97,000 to purchase $100,000 of bonds that carry a 8% interest rate and will mature five years from the date of purchase.Interest on the bonds is paid September 30 and March 31 of each year.First Company plans to hold the bonds until maturity.The market rate of interest at the time of issue was 8.75%.Both companies use separate accounts for bond premiums and discounts; and,amortize the premium or discount on bonds using the effective-interest method.As of December 31,2017,the bonds had a market value of 98.Second Company called one-half of the bonds on March 31,2018 at 101.
a_Prepare all necessary 2017 and 2018 journal entries from the point of view of First Company.
b_Prepare all necessary 2017 and 2018 journal entries from the point of view of Second Company.
c_Show how the bonds would be presented on the balance sheet of First Company at December 31,2017.

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The Answer of On September 30,2017,First Company paid Second Company $97,000 to purchase $100,000 of bonds that carry a 8% interest rate and will mature five years from the date of purchase.Interest on the bonds is paid September 30 and March 31 of each year.First Company plans to hold the bonds until maturity.The market rate of interest at the time of issue was 8.75%.Both companies use separate accounts for bond premiums and discounts; and,amortize the premium or discount on bonds using the effective-interest method.As of December 31,2017,the bonds had a market value of 98.Second Company called one-half of the bonds on March 31,2018 at 101.
a_Prepare all necessary 2017 and 2018 journal entries from the point of view of First Company.
b_Prepare all necessary 2017 and 2018 journal entries from the point of view of Second Company.
c_Show how the bonds would be presented on the balance sheet of First Company at December 31,2017.

On September 30,2017,First Company Paid Second Company $97,000 to Purchase