euestion On January 1, 2017, Cullumber Company purchased 896 bonds having a matu

Question

euestion On January 1, 2017, Cullumber Company purchased 896 bonds having a maturity value of $280,000, for $303,589.66. The bonds provide the bondholders with a 6% yield. They are dated Janua 2017, and mature January 1, 2022, with interest receivable January 1 of each year. Cullumber Company uses the effective-interest method to allocate unamortized discount or premium. The bor are classified in the held-to-maturity category. Prepare the journal entry at the date of the bond purchase. (Enter answers to 2 decimal places, e.g. 2,525.25. Credit account titles are automatically indented when amount is ente Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit Jan. 1, 2017 SHOW LIST OF ACCOUNTS

Explanation / Answer

Solution 1:

Solution 2:

Solution 3:

Journal Entries - Cullumber Company Date Particulars Debit Credit 1-Jan-17 Investment in Bond Dr $280,000.00 Premium on bond Dr $23,589.66          To Cash $303,589.66 (To record purchase of bond at premium)

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