Glover purchased bonds with a of $300,000 for $307,493.34 on January 1, 2019. The bonds carry a face rate of interest of 12%, pay interest semiannually on June 30 and December 31, were purchased to be held to are due December 31, 2021, and were purchased to yield 11%. On January 1, 2020, in contemplation of a major acquisition, the bonds were sold for $300,000. Glover uses the effective interest method.
Required:
1. Prepare journal entries to record the purchase of the bonds, the first two interest receipts, and the sale of the bonds.
2. Next Level Discuss the considerations involved when held-to-maturity debt securities are sold prior to their date.
