I do not understand entry B and why my answers are wrong.
Homework Answers
Solution:
| Journal Entries - Indigo Company | |||
| Event | Particulars | Debit | Credit |
| a | Debt investment Dr | $96,958.00 | |
| To Cash | $96,958.00 | ||
| b | Cash Dr ($107,000*3%) | $3,210.00 | |
| Debt investment Dr | $668.00 | ||
| To Interest revenue ($96,958*4%) | $3,878.00 | ||
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I do not understand entry B and why my answers are wrong.
Practice Brief Exercise 17-01...
Larkspur Corporation purchased, as a held-to-maturity investment, $55,000 of the 8%, 4-year bonds of Harrison, Inc....
Larkspur Corporation purchased, as a held-to-maturity investment, $55,000 of the 8%, 4-year bonds of Harrison, Inc. for $58,861, which provides a 6% return bonds pay interest semiannually. Prepare Larkspur's journal entries for (a) the purchase of the investment, and (b) the receipt of semiannual interest and premium amortization. Assume effects interest amortization is used. (Round answers to decimal places, e.g. 5,125. Credit account titles are automatically indented when amount is ent Do not indent manually. If no entry is required,...
Larkspur Corporation purchased, as a held-to-maturity investment, $55,000 of the 8%, 4-year bonds of Harns Inc....
Larkspur Corporation purchased, as a held-to-maturity investment, $55,000 of the 8%, 4-year bonds of Harns Inc. for $58,861, which provides a 6% return. The bonds pay interest semiannually. Prepare Larkspur's journal entries for (a) the purchase of the investment, and (b) the receipt of semiannual interest and premium amortization. Assume effective-interest amortization is used. (Round answers to O decimal places, e.g. 5,125. Credit account titles are automatically indented when amount is entered. De not indent manually. If no entry is...
Sheridan Corporation purchased on January 1, 2020, as a held-to-maturity investment, $52,000 of the 7%, 5-year...
Sheridan Corporation purchased on January 1, 2020, as a held-to-maturity investment, $52,000 of the 7%, 5-year bonds of Harrison, Inc. for $56,551, which provides a 5% return. The bonds pay interest semiannually. Prepare Sheridan's journal entries for (a) the purchase of the investment, and (b) the receipt of semiannual interest and premium amortization. Assume effective- interest amortization is used. (Round answers to 0 decimal places, e.g. 5,125. Credit account titles are automatically indented when amount is entered. Do not indent...
Brief Exercise 17-1 Monty Company purchased, on January 1, 2017, as a held-to-maturity investment, $85,000 of...
Brief Exercise 17-1 Monty Company purchased, on January 1, 2017, as a held-to-maturity investment, $85,000 of the 10%, 5- year bonds of Chester Corporation for $78,873, which provides an 12% return. Prepare Monty'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. (Round answers to 0 decimal places, e.g. 1,225. Credit account titles are automatically indented when amount is entered. Do not indent manually. If...
Brief Exercise 116 On April 1, 2018, West Company purchased $397,000 of 6.75% bonds for $412,630...
Brief Exercise 116 On April 1, 2018, West Company purchased $397,000 of 6.75% bonds for $412,630 plus accrued interest as an available-for-sale security. Interest is paid on July 1 and January 1 and the bonds mature on July 1, 2023. Your answer is partially correct. Try again. Prepare the journal entry on April 1, 2018. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account...
Brief Exercise 17-1 Skysong Company purchased, on January 1, 2017, as a held-to-maturity investment, $65,000 of...
Brief Exercise 17-1 Skysong Company purchased, on January 1, 2017, as a held-to-maturity investment, $65,000 of the 10%, 5-year bonds of Chester Corporation for $60,314, which provides an 12% return. Prepare Skysong'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 (Round answers to o decimal places, e.g. 1,225. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no...
Exercise 14-23 On December 31, 2017, the Indigo Bank enters into a debt restructuring agreement w...
Exercise 14-23 On December 31, 2017, the Indigo Bank enters into a debt restructuring agreement with Barkley Company, which is now experiencing financial trouble. The bank agrees to restructure a 12%, issued at par, $3,700,000 note receivable by the following modifications: 1. Reducing the principal obligation from $3,700,000 to $2,960,000. 2. Extending the maturity date from December 31, 2017, to January 1, 2021. 3. Reducing the interest rate from 12% to 10%. Barkley pays interest at the end of each...
Exercise 14-23 On December 31, 2017, the Indigo Bank enters into a debt restructuring agreement with Barkley Company, which is now experiencing financial trouble. The bank agrees to restructure a 12%,...
Exercise 14-23 On December 31, 2017, the Indigo Bank enters into a debt restructuring agreement with Barkley Company, which is now experiencing financial trouble. The bank agrees to restructure a 12%, issued at par, $3,700,000 note receivable by the following modifications: 1. Reducing the principal obligation from $3,700,000 to $2,960,000. 2. Extending the maturity date from December 31, 2017, to January 1, 2021. 3. Reducing the interest rate from 12% to 10%. Barkley pays interest at the end of each...
Brief Exercise 17-2 Culver Company purchased, on January 1, 2017, as an available-for-sale security, $74,000 of...
Brief Exercise 17-2 Culver Company purchased, on January 1, 2017, as an available-for-sale security, $74,000 of the 1196, 5-year bonds of Chester Corporation for $68,794, which provides an 13% Prepare Culver's journal entries for (a) the purchase of the investment, (b) the receipt of annual interest and discount amortization, and (c) the year-end fair value adjustment. (Assume a zero balance in the Fair Value Adjustment account.) The bonds have a year-end fair value of $70,300. (Round answers to 0 decimal...
(C) Prepare the journal entry to record the interest revenue and the amortization at December 31,...
(C) Prepare the journal entry to record the interest revenue and the amortization at December 31, 2017. (Round answers to 2 decimal places. c. 2525 25. Credit account bies are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account tles and enter for the amounts) Debit Credit Date Account Titles and Explanation Dec 31, 2017 SHOW LIST OF ACCOUNTS LINK TO TEXT Attempts of used SAVE R TER...
Larkspur Corporation purchased, as a held-to-maturity investment, $55,000 of the 8%, 4-year bonds of Harrison, Inc. for $58,861, which provides a 6% return bonds pay interest semiannually. Prepare Larkspur's journal entries for (a) the purchase of the investment, and (b) the receipt of semiannual interest and premium amortization. Assume effects interest amortization is used. (Round answers to decimal places, e.g. 5,125. Credit account titles are automatically indented when amount is ent Do not indent manually. If no entry is required,...
Larkspur Corporation purchased, as a held-to-maturity investment, $55,000 of the 8%, 4-year bonds of Harns Inc. for $58,861, which provides a 6% return. The bonds pay interest semiannually. Prepare Larkspur's journal entries for (a) the purchase of the investment, and (b) the receipt of semiannual interest and premium amortization. Assume effective-interest amortization is used. (Round answers to O decimal places, e.g. 5,125. Credit account titles are automatically indented when amount is entered. De not indent manually. If no entry is...
Sheridan Corporation purchased on January 1, 2020, as a held-to-maturity investment, $52,000 of the 7%, 5-year bonds of Harrison, Inc. for $56,551, which provides a 5% return. The bonds pay interest semiannually. Prepare Sheridan's journal entries for (a) the purchase of the investment, and (b) the receipt of semiannual interest and premium amortization. Assume effective- interest amortization is used. (Round answers to 0 decimal places, e.g. 5,125. Credit account titles are automatically indented when amount is entered. Do not indent...
Brief Exercise 17-1 Monty Company purchased, on January 1, 2017, as a held-to-maturity investment, $85,000 of the 10%, 5- year bonds of Chester Corporation for $78,873, which provides an 12% return. Prepare Monty'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. (Round answers to 0 decimal places, e.g. 1,225. Credit account titles are automatically indented when amount is entered. Do not indent manually. If...
Brief Exercise 116 On April 1, 2018, West Company purchased $397,000 of 6.75% bonds for $412,630 plus accrued interest as an available-for-sale security. Interest is paid on July 1 and January 1 and the bonds mature on July 1, 2023. Your answer is partially correct. Try again. Prepare the journal entry on April 1, 2018. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account...
Brief Exercise 17-1 Skysong Company purchased, on January 1, 2017, as a held-to-maturity investment, $65,000 of the 10%, 5-year bonds of Chester Corporation for $60,314, which provides an 12% return. Prepare Skysong'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 (Round answers to o decimal places, e.g. 1,225. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no...
Brief Exercise 17-2 Culver Company purchased, on January 1, 2017, as an available-for-sale security, $74,000 of the 1196, 5-year bonds of Chester Corporation for $68,794, which provides an 13% Prepare Culver's journal entries for (a) the purchase of the investment, (b) the receipt of annual interest and discount amortization, and (c) the year-end fair value adjustment. (Assume a zero balance in the Fair Value Adjustment account.) The bonds have a year-end fair value of $70,300. (Round answers to 0 decimal...
(C) Prepare the journal entry to record the interest revenue and the amortization at December 31, 2017. (Round answers to 2 decimal places. c. 2525 25. Credit account bies are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account tles and enter for the amounts) Debit Credit Date Account Titles and Explanation Dec 31, 2017 SHOW LIST OF ACCOUNTS LINK TO TEXT Attempts of used SAVE R TER...
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