Strong Equipment Company made the following purchases of debt securities during 2003. All are classified as held to maturity, and all pay interest semiannually.
|
Purchase Date |
Corp. |
Face Amount |
Cost |
Interest Rate, % |
Maturity Date |
Last Interest Payment Date |
|
10/15/03 |
A |
$ 5,000 |
102 |
9 |
1/1/08 |
7/1/03 |
|
11/30/03 |
B |
10,000 |
96 |
12 |
4/1/06 |
10/1/03 |
|
12/15/03 |
C |
15,000 |
98 |
14 |
6/1/07 |
12/1/03 |
|
12/31/03 |
D |
12,000 |
105 |
10¼ |
5/1/04 |
11/1/03 |
Required
1. Prepare journal entries for the purchases.
2. Show all adjusting entries relating to the bonds on December 31, 2003, assuming that Strong Equipment Company closes its book on that date and uses the straight line amortization method.