Presented below is an amortization schedule related to Culver
Company’s 5-year, $150,000 bond with a 7% interest rate and a 4%
yield, purchased on December 31, 2018, for $170,034.
|
Cash |
Interest |
Bond Premium |
Carrying Amount |
||||
---|---|---|---|---|---|---|---|---|
12/31/18 |
$170,034 | |||||||
12/31/19 |
$10,500 | $6,801 | $3,699 | 166,335 | ||||
12/31/20 |
10,500 | 6,653 | 3,847 | 162,488 | ||||
12/31/21 |
10,500 | 6,500 | 4,000 | 158,488 | ||||
12/31/22 |
10,500 | 6,340 | 4,160 | 154,328 | ||||
12/31/23 |
10,500 | 6,172 | 4,328 | 150,000 |
The following schedule presents a comparison of the amortized cost
and fair value of the bonds at year-end.
12/31/19 |
12/31/20 |
12/31/21 |
12/31/22 |
12/31/23 |
||||||
---|---|---|---|---|---|---|---|---|---|---|
Amortized cost |
$166,335 | $162,488 | $158,488 | $154,328 | $150,000 | |||||
Fair value |
$165,800 | $164,700 | $160,400 | $155,400 | $150,000 |
(a) | 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. | |
(b) | Prepare the journal entry related to the held-to-maturity bonds for 2019. | |
(c) | Prepare the journal entry related to the held-to-maturity bonds for 2021. | |
(d) | Prepare the journal entry to record the purchase of these bonds, assuming they are classified as available-for-sale. | |
(e) | Prepare the journal entries related to the available-for-sale bonds for 2019. | |
(f) | Prepare the journal entries related to the available-for-sale bonds for 2021. |
Presented below is an amortization schedule related to Culver Company’s 5-year, $150,000 bond with a 7%...
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