BE17-3

Carow Corporation purchased, as a held-to-maturity investment, $60,000 of the 8%, 5-year bonds of Harrison, Inc. for $65,118, which provides a 6% return. The bonds pay interest semiannually. Prepare Carows’ journal entries for (a) the purchase of the investment, and (b) the receipt of semiannual interest and premium amortization. Assume effective interest amortization is used. (Round answers to zero decimal places, e.g. 25,510. List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)

BE17-4

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Hendricks Corporation purchased trading investment bonds for $50,000 at par. At December 31, Hendricks received annual interest of $2,000, and the fair value of the bonds was $47,400. Prepare Hendricks’ journal entries for (a) the purchase of the investment, (b) the interest received, and (c) the fair value adjustment.