Problem:
On April 1, 2014, West Company purchased $450,000 of 6.00% bonds for $467,750 plus accrued interest as an available-for sale security. Interest is paid on July 1 and January 1 and the bonds mature on July 1, 2019.
Required:
Question 1: Prepare the journal entry on April 1, 2014.
Question 2: The bonds are sold on November 1, 2015 at 103 plus accrued interet. Amortization was recorded when interest was received by the straight-line method. prepare all entries required to properly record the sale.
Note: Provide support for your rationale.