(Solution) - Garfield Company purchased on January 1 2017 as a held to maturity -(2025 Original AI-Free Solution)

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Academic Level: Undergrad. (yrs 3-4)

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Garfield Company purchased, on January 1, 2017, as a held-to-maturity investment, $80,000 of the 9%, 5-year bonds of Chester Corporation for $74,086, which provides an 11% return. Prepare Garfield's journal entries for
(a) The purchase of the investment,
(b) The receipt of annual interest and discount amortization. Assume effective-interest amortization is used.