Investments in Held-to-Maturity Securities
Response to the following problem:
Control Group purchased thirty $1,000, 10%, 20-year bonds of Natchez Corporation on January 1, 2009, as a long-term investment. The bonds mature on January 1, 2029, and interest is payable every January 1 and July 1. Control Group's reporting year ends December 31, and the company uses the straight-line method of amortizing premiums and discounts.
Make all necessary journal entries relating to the bonds for 2009, assuming:
1. The purchase price is 104% of face value.
2. The purchase price is 94% of face value.