Question

On January 1, 2017, Metlock Company purchased 9% bonds having a maturity value of $210,000 for $227,221 68. The bonds provide the bondholders th a 7% yield. They are dated January 1, 2017, and mature January 1, 2022, with interest receivable January 1 of each year. Metlock Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category Prepare the journal entry at the date of the bond purchase. (Enter answers to 2 decimal places, e.g. 2,525.25. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts) Date Account Titles and Explanation Debit Credit Jan. 1, 2017 LINK TO TEXT Prepare a bond amortization schedule. (Round answers to 2 decimal places, e.g.2,525.25.) Schedule of Interest Revenue and Bond Premium Amortization Effective-Interest Method Cash Received Interest Revenue Premium Carrying Amount Amortized Date of Bonds

Answer 1

Date	Account Title and Explanation	Debit	Credit
Jan, 1 2017	Debt Investments/Investment in bonds	210000
	Preium on bond investment	17221.68
	Cash		227221.68
	(To record investment in bond)
Date	Cash Received	Interest Revenue	Premium amortized	Carrying amount of Bonds
1/1/2017				227221.68
1/1/2018	18900	15905.52	2994.48	224227.20
1/1/2019	18900	15695.90	3204.10	221023.10
1/1/2020	18900	15471.62	3428.38	217594.72
1/1/2021	18900	15231.63	3668.37	213926.35
1/1/2022	18900	14974.84	3925.16	210000
Date	Account Title and Explanation	Debit	Credit
Dec, 31 2017	Interest receivable	18900
	Interest revenue		15905.52
	Preium on bond investment		2994.48
	(To record interest revenue)
Date	Account Title and Explanation	Debit	Credit
Dec, 31 2018	Interest receivable	18900
	Interest revenue		15695.90
	Preium on bond investment		3204.10
	(To record interest revenue)