GBC Corp

Subject:AccountingPrice:3.86 Bought12

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GBC Corp. bought a $10,000 8% bond from Humber Inc. on January 1, 2019. It matures on December 31, 2021  Interest rates in the market are currently 10% and it is management's intent to hold this long term investment to maturity

Required

a Calculate the present value of this bond investment

b Prepare an amortization table for the life of this bond

c Prepare the journal entries required to record:

i) the bond purchase ii) the annual interest payments iii) The repayment at the end

 

d Now assume that the bond was acquired as a FV-NI investment

The Fair Market Value(FMV) at the end of each year was:

2019 $9,900 2020 $9,600

i) Prepare the journal entries required at the end of each year to reflect the gain or loss due to the FMV process using a Tee (ledger) account to organize your answer.