DR Investment in Bonds 500,000 DR Bond Premium 2,800 CR Cash 502,800
2. At Maturity
DR Cash 502,000 DR Loss on Investment 800
CR Investment 500,000 CR Bond Premium 2,800
Acquisition / Actual Purchased cost - $502,800
Nominal Value - $500,000
Purchase Date: 31st Dec 13
Maturity Date: 31st Mar 14
Market Value : $501,600
Coupon Rate: 2.85%
Based on straight line amortization of cost,
If we booked the initial purchase per the following:
Dr Purchase of Bond - $502,800
Cr Cash $502,800
1. what is the accounting entries for the amortization cost and how much?
2. Upon maturity, what is the accounting entries to realised the gain/loss assuming the market price as of 31 Mar 14 is $502,000
Appreciate some help on the above entries.
