Lance Brothers Enterprises acquired $755,000 of 4% bonds, dated July 1, on July 1, 2021, as a long-term investment. Management has the positive intent and ability to hold the bonds until maturity. The market interest rate (yield) was 5% for bonds of similar risk and maturity. Lance Brothers paid $675,000 for the investment in bonds and will receive interest semiannually on June 30 and December 31. Prepare the journal entries (a) to record Lance Brothers’ investment in the bonds on July 1, 2021, and (b) to record interest on December 31, 2021, at the effective (market) rate. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

July 1st 2021

Investment in Bonds 775,000

Discount on Bonds investment 100,000

Cash 675,000

Discount on Bonds investment is calculated by taking the difference between 775,000 and 675,000 so it would equal 100,000

December 31st 2021

Cash $15,500

Discount on Bond investment $1,375

Interest revenue $16,875

Cash is calculated by multiplying 775,000 with 4%/2 so that it equals 15,500

interest revenue is calculated by multiplying 675,000 with 5%/2 so that is will be 16,875

then for the discount, you take the difference between the interest of what you bought the bond at 16,875 and subtract the cash coupon payment you are receiving 15,500 = 1,375

Good luck!

answer; (1) blank; decreases; ///blank(2) increases; ///blank(3)increases;

answermarginal cost;