Accounting Ch 17 Investments
On January 1, 2020, Swifty Company purchased 4% bonds, having a maturity value of $430,000 for $366,027. The bonds provide the bondholders with a 6% yield. They are dated January 1, 2020, and mature January 1, 2027, with interest paid on June 30 and December 31 of each year. Swifty 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.
2020 | $367,000 | 2023 | $387,000 | |||
|---|---|---|---|---|---|---|
2021 | $362,000 | 2024 | $407,000 | |||
2022 | $357,000 |
| (a) | Prepare the journal entry at the date of the bond purchase. | |
| (b) | Prepare the journal entries to record the interest revenue and recognition of fair value for 2020. | |
| (c) | Prepare the journal entry to record the recognition of fair value for 2021. |
Homework Answers
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bondholders with a 9% 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....
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year. Stellar Company uses the effective-interest method to
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as available-for-sale category. The fair value of the bonds at
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