Question - The following information relates to the debt securities investments of Kiran Company during 2016.
a) On January 1, the company purchased 8% bonds of Tempe Co. at 99 plus accrued interest. Face value of the bonds was $240,000. Interest is payable May 1 and November 1. Maturity date is 11/1/17.
b) On May 1, semiannual interest is received and amortization is updated.
c) On July 1, 10% bonds of Flagstaff were purchased. The bonds had a par value of $75,000 and were purchased at 101 plus accrued interest. Interest dates are March 1 and September 1. Maturity date is 9/1/17.
d) On September 1, semiannual interest is received and amortization updated for the Flagstaff bonds.
e) On November 1, semiannual interest is received and amortization updated for the Tempe bonds.
f) On December 31, interest is accrued and amortization updated for both sets of bonds.
REQUIRED: Prepare journal entries for all dates. Use straight-line amortization. When computing amortization, round your monthly amortization amount to the nearest cent. However, journal entry amounts can be rounded to the nearest dollar. Provide supporting computations below each journal entry. Show all the journal entries for the Tempe bonds (Items a, b, e, f), then show all the entries for Flagstaff bonds (Items c, d, f).