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Exercise 17-3 On January 1, 2017, Bonita Company purchased 9% bonds having a maturity value of $200,000, for $303,599.66. The

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Answer #1
REQUIRED 1 :
Date Account titles and explanation Debit Credit
Jan 1,2017 Debt investments ( Held-to -Maturity ) $ 303,589.66
                            Cash $ 303,589.66
( to record purchase of bonds at premium )
REQUIRED 2 :
                                                                               Schedule of interest Revenue and bond premium amortization
                                                                                                                            Effective - interest Method
Date Cash received Interest revenue Premium Amortized Carrying amount of bonds
01-01-2017 $ 303,589.66
01-01-2018 $ 22,400    {$280,000 *8 %} $ 18,215.38   {$303,589.66*6%} $ 4,184.62 {$ 22,400 - $ 18,215.38} $ 299,405.04 {$303,589.66 - $ 4,184.62}
01-01-2019 $ 22,400    {$280,000 *8 %} $ 17,964.30   {$299,405.04*6%} $ 4,435.70    {$ 22,400 -$ 17,964.30} $ 294,969.34 {$299,405.04 -$ 4,435.70}
01-01-2020 $ 22,400    {$280,000 *8 %} $ 17,698.16    {$ 294,969.34 *6%} $ 4,701.84    {$22,400 - $ 17,698.16 } $ 290,267.50   {$294,969.34 -$ 4,701.84}
01-01-2021 $ 22,400    {$280,000 *8 %} $ 17,416.05   {$290,267.50 *6 % } $ 4,983.95    {$22,400 -$ 17,416.05} $ 285,283.55   {$ 290,267.50 - $ 4,983.95}
01-01-2022 $ 22,400    {$280,000 *8 %} $ 17,117.01   {$ 285,283.55* 6% } $ 5,282.99    {$ 22,400 - $ 17,117.01} $ 280,000.56 {$ 285,283.55 -$5282.99}
REQUIRED 3 :
Date Account titles and explanation Debit Credit
Dec 31,2017 Cash $ 22,400
       Debt investments ( Held-to -Maturity ) $ 4,184.62
      Interest Revenue $ 18,215.38
(To record interest revenue and amortization at Dec 31,2017)
REQUIRED 4 :
Date Account titles and explanation Debit Credit
Dec 31,2018 Cash $ 22,400
       Debt investments ( Held-to -Maturity ) $ 4,435.70
      Interest Revenue $ 17,964.30
(To record interest revenue and amortization at Dec 31,2018)
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