Bond Investment Discount Amortization Schedule
Response to the following problem:
The Tudor Company acquired $500,000 of Carr Corporation bonds for $487,706.69 on January 1, 2010. The bonds carry an 11% stated interest rate, pay interest semiannually on January 1 and July 1, were issued to yield 12%, and are due January 1, 2013.
Required
1. Prepare an investment interest revenue and discount amortization schedule using:
a. The straight-line method
b. The effective interest method
2. Prepare the July 1, 2012 journal entries to record the interest revenue under both methods.