January 1 2006 Jamona Corp Purchased 12 Bonds Maturity Value 300 000 322 74444 Bonds Provi Q17793508

On January 1, 2006, Jamona Corp. purchased 12% bonds, having amaturity value of $300,000, for $322,744.44. The bonds provide thebondholders with a 10% yield. They are dated January 1, 2006, andmature January 1, 2011, with interest receivable December 31 ofeach year. The company uses the effective-interest method toallocate unamortized discount or premium. The bonds are classifiedas available-for-sale. The fair value of the bonds at December 31of each year is as follows:

2006 – $320,500
2007 – $309,000
2008 – $308,000
2009 – $310,000
2010 – $300,000

Prepare theamortization table on the investment in bond.Prepare the entries on the investment in bond on1/1/06, the interest revenue and the amortization of the premium on12/31/07, and the adjustment of the investment position to fairvalue on 12/31/07.
 
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