On January 1, 2012, Morgan Company acquires $300,000 ofNicklaus, Inc., 9% bonds at a...

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On January 1, 2012, Morgan Company acquires $300,000 ofNicklaus, Inc., 9% bonds at a price of $2... On January 1, 2012,Morgan Company acquires $300,000 of Nicklaus, Inc., 9% bonds at aprice of $278,384. The interest is payable each December 31, andthe bonds mature December 31, 2014. The investment will provideMorgan Company a 12% yield. The bonds are classified asheld-to-maturity.
(a) Prepare a 3-year schedule of interest revenue and bonddiscount amortization, applying the straight-line method
(b) Prepare a 3-year schedule of interest revenue and bonddiscount amortization, applying the effective interest ethod
(c) Prepare the journal entry for the interest receipt of Dec31,2013 and discount amrtization under staright line method
(d) Prepare the journal entry for the interest receipt of Dec31,2013 and discount amrtization under effective interesmethod

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Schedule of Interest Revenue and Bond Discount Amortization Straight-line Method 9% Bond Purchased to Yield 12%
Date	Cash Received	Interest Revenue	Bond Discount Amortization	Carrying Amount of bonds
01/01/2012				278,384
12/31/2012	(300000*9%) 27000	34,205	7,205	285,589
12/31/2013	27000	34,205	7,205	292,795
12/31/2014	27000	34,205	7,206	300,000

(300000-278384)/3 = 7205

Schedule of Interest Revenue and Bond Discount Amortization Effective-Interest Method 9% Bond Purchased to Yield 12%
Date	Cash Received	Interest Revenue	Bond Discount Amortization	Carrying Amount of bonds
01/01/2012	-			278,384.00
12/31/2012	27000	33406.08**	(33406-27000) 6406.08	284,790.08
12/31/2013	27000	34174.81	7174.81	291,964.89
12/31/2014	27000	35035.11	8035.11	300,000.00

* *$278,384 X .12 = $33,406.08

c
31-Dec-13	Cash	27000
	Debt Investments (Held to maturity)	7205
	Interest Revenue		34205

31-Dec-13	Cash	27000
	Debt Investments (Held to maturity)	7174.81
	Interest Revenue		34174.81

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In: AccountingOn January 1, 2012, Morgan Company acquires $300,000 ofNicklaus, Inc., 9% bonds at a price...On January 1, 2012, Morgan Company acquires $300,000 ofNicklaus, Inc., 9% bonds at a price of $2... On January 1, 2012,Morgan Company acquires $300,000 of Nicklaus, Inc., 9% bonds at aprice of $278,384. The interest is payable each December 31, andthe bonds mature December 31, 2014. The investment will provideMorgan Company a 12% yield. The bonds are classified asheld-to-maturity.(a) Prepare a 3-year schedule of interest revenue and bonddiscount amortization, applying the straight-line method(b) Prepare a 3-year schedule of interest revenue and bonddiscount amortization, applying the effective interest ethod(c) Prepare the journal entry for the interest receipt of Dec31,2013 and discount amrtization under staright line method(d) Prepare the journal entry for the interest receipt of Dec31,2013 and discount amrtization under effective interesmethod