On January 1, 2015, the Widner Company acquired 12% bonds with a face value of $350,000 and classified as held-to-maturity. The bonds pay interest on June 30 and December 31, and mature on December 31, 2024.
Required: a. Assume the bonds were acquired for $323,515 to yield 14%. Prepare an investment discount amortization schedule for the first year of the investment, using the effective interest method. Round all calculations to the nearest dollar.
b. Assume the bonds were acquired for $381,156 to yield 10%. Prepare an investment premium amortization schedule for the first year of the investment using the effective interest method. Round all calculations to the nearest dollar.

Question

On January 1, 2015, the Widner Company acquired 12% bonds with a face value of $350,000 and classified as held-to-maturity. The bonds pay interest on June 30 and December 31, and mature on December 31, 2024.
Required: a.	Assume the bonds were acquired for $323,515 to yield 14%. Prepare an investment discount amortization schedule for the first year of the investment, using the effective interest method. Round all calculations to the nearest dollar.
b.	Assume the bonds were acquired for $381,156 to yield 10%. Prepare an investment premium amortization schedule for the first year of the investment using the effective interest method. Round all calculations to the nearest dollar.

Quizplus · Accepted Answer

The Answer of On January 1, 2015, the Widner Company acquired 12% bonds with a face value of $350,000 and classified as held-to-maturity. The bonds pay interest on June 30 and December 31, and mature on December 31, 2024.
Required: a.	Assume the bonds were acquired for $323,515 to yield 14%. Prepare an investment discount amortization schedule for the first year of the investment, using the effective interest method. Round all calculations to the nearest dollar.
b.	Assume the bonds were acquired for $381,156 to yield 10%. Prepare an investment premium amortization schedule for the first year of the investment using the effective interest method. Round all calculations to the nearest dollar.

On January 1, 2015, the Widner Company Acquired 12% Bonds