Question

Problem 17-01 Presented below is an amortization schedule related to Buffalo Company's 5-year, $180,000 bond with a 6% interest rate and a 3% yield, purchased on December 31, 2018, for $204,731. Cash Interest Received Revenue Bond Premium Amortization Date 12/31/18 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 $10,800 10,800 10,800 10,800 10,800 $6,142 6,002 5,858 5,710 5,557 $4,658 4,798 4,942 5,090 5,243 Carrying Amount of Bonds $204,731 200,073 195,275 190,333 185,243 180,000 The following schedule presents a comparison of the amortized cost and fair value of the bonds at year-end. Amortized cost Fair value 12/31/19 $200,073 $199,500 12/31/2012/31/21 $195,275 $190,333 $197,300 $192,200 12/31/22 $185,243 $186,200 12/31/23 $180,000 $180,000 (a) (b) (c) (d) (e) (1) Prepare the journal entry to record the purchase of these bonds on December 31, 2018, assuming the bonds are classified as held-to-maturity securities. Prepare the journal entry related to the held-to-maturity bonds for 2019. Prepare the journal entry related to the held-to-maturity bonds for 2021. Prepare the journal entry to record the purchase of these bonds, assuming they are classified as available-for-sale. Prepare the journal entries related to the available-for-sale bonds for 2019. Prepare the journal entries related to the available-for-sale bonds for 2021. (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 titles and enter o for the amounts.)

Answer 1

credit bebit $204,73/ $204731 $10.800 blbec-31 1$4,658 1$ 6,142 $ 10800 Dec-al Cash Ale ! $4,942 $ 5,858 $204,731 $ 204,731 Answers - Journal Entries bate particulars LF 2018, Held-to-Maturity securilies Ac or becill 1 To cash Weola cash Ale or To Held- to- Madzevily securities TO Interest Revenue or To Hell to matuoily securities To interest Revence 2018 Available for sale securities Ale or To cash le 2019 Cash Ale Dr T available for sale securities To Interest Revenue unrealised holding gain/logs-Equily Aeor To Securities fair value adjustment { $200,073-$19 1/2001 i cash Ale pec-311 TO Available for sale securities TO Interest Revencie Securities fair valere adjustercut To curealized holding gaiolcoos $10800 Dec-311 $4,658 $ 6,149 $573 $573 $10.800 $4,942 1$ 5,856 $160 $160 working Noter previous balance = $197,300-$195,273 = $2,027 Key wew Balance = $ 192,200-$190,333 = $1,867 $160