Question - On January 1, 2010, Morgan Company acquires $300,00 of Nickalaus, Inc., 9% bonds at a price of $278,384. The interest is payable each December 31, and the bonds mature December 31, 2012. The investment will provide Morgan Company a 12% yield. The bonds are classified as held-to-maturity.
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