11. Carsen Company purchased $200,000 of 10% bonds of Garrison Co. on January 1, 2016, paying$211,950. The bonds mature January 1, 2026; interest is payable each July 1 and January 1. Thediscount of $11,950 provides an effective yield of 9%. Carsen's objective is to hold the bonds tocollect the contractual cash flows. Carsen Company uses the effective interest method.12. On July 1, 2016, Carsen Company should decrease its Held-for-Collection Debt Investmentsaccount for the Garrison Co. bonds by:.

Debt financing is performed by many companies in order to acquire funds by issuing bonds in the…

Answered: 12. On July 1, 2016, Carsen Company…

12. On July 1, 2016, Carsen Company should decrease its Held-for-Collection Debt Investments account for the Garrison Co. bonds by.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Question

11. Carsen Company purchased $200,000 of 10% bonds of Garrison Co. on January 1, 2016, paying
$211,950. The bonds mature January 1, 2026; interest is payable each July 1 and January 1. The
discount of $11,950 provides an effective yield of 9%. Carsen's objective is to hold the bonds to
collect the contractual cash flows. Carsen Company uses the effective interest method.
12. On July 1, 2016, Carsen Company should decrease its Held-for-Collection Debt Investments
account for the Garrison Co. bonds by:.

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On January 1, 2020 a company purchases bonds as an investment. The company does not have the intent or ability to hold the bonds to maturity and is not in the business of trading investment securities. The bonds have a face value of $150,000, a stated rate of 8.0% and were purchased for $145,000. Interest is payable semiannually on June 30 and December 31 and the bonds mature on December 31, 2024. The company uses the straight line method to amortize any related premium or discount. On December 31, 2020 the bonds have a fair value of $148,000. The bonds are sold on July 1, 2021 for $149,000 (the interest payment received on June 30, 2021 was properly recorded). Required: Provide the journal entries for: acquisition, the first interest payment, the year-end adjustment at 12/31/20, and for the sale on 7/1/21.
D4. As of december 31, 2019, Sandy Beach had $9,500,000 in 4.5 percent serial bonds outstanding. Cash of $509,000 is the debt service fund’s only asset as of December 31, 2019, and there are no liabilities. The serial bonds pay interest semiannually on January 1 and July 1, with $500,000 in bonds being retired on each interest payment date. Resources for payment of interest are transferred from the General Fund, and the debt service fund levies property taxes in an amount sufficient to cover principal payments.
53.On January 1, 2020, ABC purchased bonds with a par value of $ 700,000 for $ 666,633. The nominal interest rate on the bonds was 12% and the market interest rate was 14%. The bonds pay interest on June 30 and December 31. What will be the interest income that ABC will report in its 2020 income and expense statement? Select one: a $ 93,655. b. $ 84,000. c. $ 46,664. d. $ 42,000.
(Use the following information for questions 2 and 3) Always Be Counting Co. issued callable bonds on January 1, 2016. ABC's accountant has created the following amortization schedule from issuance until maturity: olqar zi ning of boong noilmogtoo olosu 12 gnello stated in tra Date 1/1/2016 6/30/2016 12/31/2016 6/30/2017 12/31/2017 6/30/2018 12/31/2018 000 6/30/2019 12/31/2019 Show Transcribed Text Cash as the Effective interest a. 3% b. 3.5% Ⓒ6% d. 7% interest $7,000 7,000 7,000 7,000 7,000 7,000 no 07,000 7,000 a. No gain or loss. b. $3,717 gain. c. $6,000 loss. d. $2,283 loss. $6,211 10 $207,020 Star W $789 206,230 6,187 813 205,417 6.163 837 204,580 6,137 863 203,717 6,112 888 202,829 6,085 vol 915 a 201,913 pent 200,971 200,000 Decrease in Outstanding Carry balance 6,0570943 A 6,029 What was the market rate of interest on ABC's bonds at the time of issuance? G I 971 2. What was the market rate of interest on ABC's bonds at the time of issuance? CV. I Int expense = * J Carrying…
Ee 112.
On December 31, 2017, what has happened to the market rate of interest since the date the bond was originally issued? a. The market rate has increased over time. b. The market rate has decreased over time. c. Can’t be determined
E14.4 (LO 1) Celine Dion Company issued $600,000 of 10%, 20-year bonds on January 1, 2020, at 102. Interest is payable semiannually on July 1 and January 1. Dion Company uses the straight-line method of amortization for bond premium or discount.Instructions Prepare the journal entries to record the following. a. The issuance of the bonds. b. The payment of interest and the related amortization on July 1, 2020. c. The accrual of interest and the related amortization on December 31, 2020.

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