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21. A partial list of investment activities for Honda Inc. during YR01 and YR02 appears...

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Accounting

21. A partial list of investment activities for Honda Inc. during YR01 and YR02 appears below.

REQUIRED:

  1. Prepare a partial amortization schedule for the bond investment purchased on September 1, YR01. Your solution should cover through the interest payment to be received on February 1, YR03. Bond discount or premium is amortized using the effective-interest method of amortization.

Sept. 1, YR01

Purchased $2,000 of bonds issued by Target Inc. The bonds were purchased at 104 and Honda also paid a brokers fee of $60. These bonds have a coupon rate of 6% and pay interest once each year, on February 1st. The bonds are dated February 1, YR01, and mature on February 1, YR06 (five-year term). At present Honda does not have a definite plan for this investment beyond earning interest income. At the purchase date these bonds have an effective yield to maturity of 4.2%.

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