Blue Spruce Corporation purchased $64,800 of 4-year, 7% bonds of Hu Inc. for $60,526 to yield an 9% return. It classified thepurchase as an amortized cost method investment. The bonds pay interest semi-annually. Assuming Blue Spruce applies ASPE and has chosen the straight-line method of discount amortization, prepare the samethree entries requested above. (Credit account titles are automatically indented when the amount is entered. Donot indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.List all debit entries before credit entries. Round answers to 0 decimal places, e.g. 5,275.)Account Titles and ExplanationBond Investment at Amortized Costcash(To record purchase of bond investment)cashBond Investment at Amortized CostInterest Income(To record collection of semi-annual interest)cashBond Investment at Amortized CostInterest Income(To record collection of semi-annual interest)Debit6052622684562268Credit60526100SUPPOF

The bond is issued at a discount if the face value is more than the issue value. The bond discount…

Blue Spruce Corporation purchased $64,800 of 4-year, 7% bonds of Hu Inc. for $60,526 to yield an 9% return. It classified the purchase as an amortized cost method investment. The bonds pay interest semi-annually.

Blue Spruce Corporation purchased $64,800 of 4-year, 7% bonds of Hu Inc. for $60,526 to yield an 9% return. It classified the purchase as an amortized cost method investment. The bonds pay interest semi-annually.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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