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Part 1
Date |
Account titles and explanation |
Debit |
Credit |
January 1, 2017 |
Debt Investments (Held-to-Maturity) |
270502.00 |
|
Cash |
270502.00 |
Part 2
Schedule of Interest Revenue and Bond Premium Amortization Effective-Interest Method |
||||
Date |
Cash Received |
Interest Revenue |
Premium Amortized |
Carrying Amount of Bonds |
1/1/17 |
270502 |
|||
1/1/18 |
22500 |
18935.14 |
3564.86 |
266937.14 |
1/1/19 |
22500 |
18685.60 |
3814.40 |
263122.74 |
1/1/20 |
22500 |
18418.59 |
4081.41 |
259041.33 |
1/1/21 |
22500 |
18132.89 |
4367.11 |
254674.22 |
1/1/22 |
22500 |
17825.78 |
4674.22 |
250000.00 |
Cash received = 250000*9% = 22500
Interest revenue = previous carrying amount of bonds * 7%
Premium amortized = cash received – interest revenue
Carrying amount of bonds = previous carrying amount of bonds – premium amortized
Part 3
Date |
Account titles and explanation |
Debit |
Credit |
December 31, 2017 |
Cash |
22500 |
|
Debt Investments (Held-to-Maturity) |
3564.86 |
||
Interest Revenue |
18935.14 |
On January 1, 2017, Ivanhoe Company purchased 9% bonds having a maturity value of $250,000, for...
On January 1, 2017, Ivanhoe Company purchased 9% bonds having a
maturity value of $250,000, for $270,502.00. The bonds provide the
bondholders with a 7% yield. They are dated January 1, 2017, and
mature January 1, 2022, with interest receivable January 1 of each
year. Ivanhoe Company uses the effective-interest method to
allocate unamortized discount or premium. The bonds are classified
in the held-to-maturity category.
Prepare the journal entry at the date of the bond purchase.
(Enter answers to 2...
On January 1, 2017, Windsor Company purchased 9% bonds having a
maturity value of $210,000, for $227,221.68. The bonds provide the
bondholders with a 7% yield. They are dated January 1, 2017, and
mature January 1, 2022, with interest receivable January 1 of each
year. Windsor Company uses the effective-interest method to
allocate unamortized discount or premium. The bonds are classified
in the held-to-maturity category.
Prepare the journal entry at the date of the bond purchase.
(Enter answers to 2...
On January 1, 2020, Blue Company purchased 8% bonds having a maturity value of $320,000, for $346,959.62. The bonds provide the bondholders with a 6% yield. They are dated January 1, 2020, and mature January 1, 2025, with interest received on January 1 of each year. Blue Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category. Part 1 Prepare the journal entry at the date of the bond purchase. (Enter...
Exercise 17-3 On January 1, 2017, Bonita Company purchased 9% bonds having a maturity value of $200,000, for $303,599.66. The bonds provide the bondholders with a 6% yield. They are dated January 1, 2017, and mature January 1, 2022, with interest receivable January 1 of each year. Bonita Company uses the effective interest method to allocate uramortized discount or premium. The bonds are dassified in the held-to-returity category. Prepare the journal entry at the date of the bond purchase. (Enter...
On January 1, 2017, Metlock Company purchased 9% bonds having a maturity value of $210,000 for $227,221 68. The bonds provide the bondholders th a 7% yield. They are dated January 1, 2017, and mature January 1, 2022, with interest receivable January 1 of each year. Metlock Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category Prepare the journal entry at the date of the bond purchase. (Enter answers to...
On January 1, 2017, Carla Company purchased 11% bonds, having a
maturity value of $274,000, for $295,314.87. The bonds provide the
bondholders with a 9% yield. They are dated January 1, 2017, and
mature January 1, 2022, with interest received on January 1 of each
year. Carla Company uses the effective-interest method to allocate
unamortized discount or premium. The bonds are classified as
available-for-sale category. The fair value of the bonds at
December 31 of each year-end is as follows....
On January 1, 2017, Concord Company purchased 12% bonds having a maturity value of $390,000, for $419,567.77. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2017, and mature January 1, 2022, with interest receivable January 1 of each year. Concord Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category Prepare the journal entry at the date of the bond purchase. (Enter answers to 2...
On January 1, 2020, Sweet Company purchased 9% bonds having a
maturity value of $210,000, for $227,221.68. The bonds provide the
bondholders with a 7% yield. They are dated January 1, 2020, and
mature January 1, 2025, with interest received on January 1 of each
year. Sweet Company uses the effective-interest method to allocate
unamortized discount or premium. The bonds are classified in the
held-to-maturity category.
Prepare the journal entry at the date of the bond
purchase. (Enter answers to 2...
On January 1, 2020, Splish Company purchased 12% bonds having a maturity value of $350,000, for $376,535.18. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2020, and mature January 1, 2025, with interest received on January 1 of each year. Splish Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category. Prepare the journal entry at the date of the bond purchase. (Enter answers to...
On January 1, 2020, Stellar Company purchased 12% bonds, having
a maturity value of $312,000 for $335,654.22. The bonds provide the
bondholders with a 10% yield. They are dated January 1, 2020, and
mature January 1, 2025, with interest received on January 1 of each
year. Stellar Company uses the effective-interest method to
allocate unamortized discount or premium. The bonds are classified
as available-for-sale category. The fair value of the bonds at
December 31 of each year-end is as follows....