Tudor Company acquired $500,000 of Carr Corporation bonds for$487,706.69 on January 1, 2019. The bonds carry an 11% statedinterest rate, pay interest semiannually on January 1 and July 1,were issued to yield 12%, and are due January 1, 2022.

Required:

1.	Prepare an investment interest income and discount amortizationschedule using the:
a.	straight-line method
b.	effective interest method
2.	Prepare the July 1, 2021, journal entries to record theinterest income under both methods.

1a. Prepare an investment interest income and discountamortization schedule using the straight-line method.

Amortization Schedule Instructions

TUDOR COMPANY

Bond Investment Interest Income and Discount AmortizationSchedule

Straight-Line Method

1	Date	Cash Debit	Investment in Debt Securities Debit	Interest Income Credit	Carrying Value of Debt Securities
2	01/01/19
3	07/01/19
4	01/01/20
5	07/01/20
6	01/01/21
7	07/01/21
8	01/01/22

1b. Prepare an investment interest income and discountamortization schedule using the effective interest method.

Amortization Schedule Instructions

TUDOR COMPANY

Bond Investment Interest Income and Discount AmortizationSchedule

Effective Interest Method

1	Date	Cash Debit	Interest Income Credit	Investment in Debt Securities Debit	Carrying Value of Debt Securities
2	01/01/19
3	07/01/19
4	01/01/20
5	07/01/20
6	01/01/21
7	07/01/21
8	01/01/22

2a. Prepare the July 1, 2021, journal entry to record theinterest income under the straight-line method.

General Journal Instructions

PAGE 1

GENERAL JOURNAL

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
1
2
3

2b. Prepare the July 1, 2021, journal entry to record theinterest income under the effective interest method.

General Journal Instructions

PAGE 1

GENERAL JOURNAL

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
1
2
3