On January 1, 2020, PIER Company acquires $500,000 of ABC’s Company’s 10-year, 10% bonds at a price of $535,090 when the market rate is 9%. Interest is payable each December 31. The bonds are classified as held-to-maturity.
Prepare the entry to record the purchase of the ABC bonds.
Prepare an amortization schedule for the bonds for the first 2 years (2020 and 2021)
Prepare the journal entry for the receipt of the interest and amortization on 12/31/20.
On 1/1/22, the bonds are sold for $540,000. Prepare the necessary journal entry.