On january 1, 2013, phantom company acquires $200,000

/in /by

E17-5 On January 1, 2013, Phantom Company acquires $200,000 of Spiderman Products, Inc. 9% bonds at a price of $185,589 The interest is payable each December 31, and the bonds mature December 31, 2015. The investment will provide Phantom Company a 12% yield. The bonds are classified as held-to-maturity.

 

Note: Due to significant digits and rounding, there may be slight differences in values.

 

 

Instructions

(a) Prepare a 3-year schedule of interest revenue and bond discount amortization, applying the
     straight-line method.

 

(b) Prepare a 3-year schedule of interest revenue and bond discount amortization, applying the
     effective-interest method.

 

(c) Prepare the journal entry for the interest receipt of December 31, 2014, and the discount
    amortization under the straight-line method.

 

(d) Prepare the journal entry for the interest receipt of December 31, 2014, and the discount
     amortization under the effective-interest method.