On January 1, 2018, Kirmer Corporation purchased $1,000,000 of 14% bonds for $1,099,469. Kirmer Corporation has a 10% yield. Amortization is recorded using the effective-interest method. The bonds are classified in the held-to-maturity category.
Instructions:
a) Prepare the journal entry for January 1, 2018.
b) Prepare a bond amortization schedule.
c) Prepare the journal entry to record the interest revenue and the amortization at December 31, 2018.
d) Prepare the journal entry to record the interest revenue and the amortization at December 31, 2019.