E17-2 (Entries for Held-to-Maturity Securities) On January 1, 2003, Dagwood Company purchased at par 12% bonds having a maturity value of $300,000. They are dated January 1, 2003, and mature January 1, 2008, with interest receivable December 31 of each year. The bonds are classified in the held-to-maturity category.
(a) Prepare the journal entry at the date of the bond purchase.
(b) Prepare the journal entry to record the interest received for 2003.
(c) Prepare the journal entry to record the interest received for 2004.
Answer is as following:
All amount figures in Dollars
The journal entry at the date of the bond purchase
Present value factor of 12% Bond maturity period 5 years is .567
Therefore Purchase ...
Calculations and journal entries shown for your learning.