Problem
Rockfish Company purchased a 5-year, $ 200,000 bond with a 6% coupon interest rate and a 5% yield on December 31, 2018. The coupon is received annually on December 31 starting with December 31, 2019. The fair value of the bond is presented below: 12/31/19 $ 194,500 12/31/20 $ 206,000 12/31/21 $ 203,000
Task
I. Complete the amortization schedule
II. What would the entry(ies) be for the held-to- maturity bond in the year 2021? You may want to prepare an amortization schedule for this.
III. If it was categorized as an available-for-sale bond, what would the entry(ies) be in 2021?
IV. How would the entries for 2021 change if these were trading debt securities?