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On January 1, 2019, Kelly Corporation acquired bonds with a face value of $500,000 for...

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Accounting

On January 1, 2019, Kelly Corporation acquired bonds with a face value of $500,000 for $484,163.65, a price that yields a 11% effective annual interest rate. The bonds carry a 10% stated rate of interest, pay interest semiannually on June 30 and December 31, are due December 31, 2022, and are being held to maturity.

Required:

Prepare journal entries to record the purchase of the bonds and the first two interest receipts using the:
1. straight-line method of amortization
2.

effective interest method of amortization

1. image

2.

image

GENERAL JOURNAL DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT Jan. 1 Investment in Held-to-Maturity Debt Securities 484,163.65 Cash 484,163.65 Jun. 30 Cash 27,500.00 Investment in Held-to-Maturity Debt Securities 1,979.54 Interest Income 29,479.54 Dec. 31 Cash 27,500.00 Investment in Held-to-Maturity Debt Securities 1,979.54 Interest Income 29,479.54 GENERAL JOURNAL DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT Jan. 1 Investment in Held-to-Maturity Debt Securities 484,163.65 Cash 484,163.65 Jun. 30 Cash 27,500.00 Investment in Held-to-Maturity Debt Securities Interest Income Dec. 31 Cash Investment in Held-to-Maturity Debt Securities Interest Income

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