Problem
Pearl Company purchased, on January 1, 2017, as a held-to-maturity investment, $87,000 of the 9%, 5-year bonds of Chester Corporation for $80,569, which provides an 11% return. Prepare Pearl's journal entries for (a) the purchase of the investment, and (b) the receipt of annual interest and discount amortization. Assume effective-interest amortization is used.