40. On April 30, 20x1, Heidelberg Co. acquired P100,000 face amount, 10% bonds dated January 1, 20x1 at 102. The purchase price includes accrued interest. How much is the initial carrying amount of the investment?
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![40. On April 30, 20x1, Heidelberg Co. acquired P100,000 face amount, 10% bonds
dated January 1, 20x1 at 102. The purchase price includes accrued interest. How
much is the initial carrying amount of the investment?
a. 102,000
b. 99,500
c. 98,667
d. 105,333](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F8ea88882-4067-49de-8eff-eee3f6afc7f0%2F2fc8e89e-ec38-48b4-bd9b-2b6cc3b1460f%2F1dpdbug_processed.png&w=3840&q=75)
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- On October 1, Dennis Company purchase P200,000 face value 12% bonds for 98% plus accrued interest and brokerage fees and classified them as amortized cost assets. Interest is paid semiannually on January 1 and July 1. Brokerage fees for this transaction were P700. At what amount should this acquisition of bonds be recorded? On October 1, Dennis Company purchase P200,000 face value 12% bonds for 98 plus accrued interest and brokerage fees and classified them as amortized cost assets. Interest is paid semiannually on January 1 and July 1. Brokerage fees for this transaction were P700. At what amount should this acquisition of bonds be recorded? a. 196,000 b. 196,700 c. 202,000 d. 202,700On 1/1/23, Jeckle Technologies Inc. paid $4, 792, 085 to acquire $5,000,000 in bonds that mature in 5 years. The bonds pay interest semi - annually at 6% per annum on 6/30 and 12/31. The fair value of the bonds at 12/31/23 was $4, 930, 392. Required: • Prepare the 2023 journal entries if the investment is classified as (i) HTM or (ii) AFS. • Assume Jeckle sold the bond investment on 7/1/24 for $4,890,000. Prepare the required journal entries assuming the bond is classified as (i) HTM or (ii) AFS.Hodson Corp. purchased fifteen $1,000 3% bonds of Power Source Corporation when the market rate of interest was 10%. Interest is paid semiannually, and the bonds will mature in eight years. Using the PV function in Excel, compute the price Hodson paid (the present value) for the bond investment. (Assume that all payments of interest and principal occur at the end of the period. Round your answer to the nearest cent.) Hodson paid on the bond investment.
- Tanner-UNF Corporation acquired as a long-term investment $180 million of 7.0% bonds, dated July 1, on July 1, 2024. Company management has the positive intent and ability to hold the bonds until maturity. The market interest rate (yield) was 9% for bonds of similar risk and maturity. Tanner-UNF paid $160.0 million for the bonds. The company will receive interest semiannually on June 30 and December 31. As a result of changing market conditions, the fair value of the bonds at December 31, 2024, was $160.0 million. Required: 1. & 2. Prepare the journal entry to record Tanner-UNF's investment in the bonds on July 1, 2024 and interest on December 31, 2024, a the effective (market) rate. 3. At what amount will Tanner-UNF report its investment in the December 31, 2024, balance sheet? 4. Suppose Moody's bond rating agency downgraded the risk rating of the bonds motivating Tanner-UNF to sell the investment on January 2, 2025, for $130.0 million. Prepare the journal entry to record the sale.…Tanner-UNF Corporation acquired as a long-term investment $240 million of 6% bonds, dated July 1, on July 1, 2024. Company management has the positive intent and ability to hold the bonds until maturity. The market interest rate (yield) was 8% for bonds of similar risk and maturity. Tanner-UNF paid $200 million for the bonds. The company will receive interest semiannually on June 30 and December 31. As a result of changing market conditions, the fair value of the bonds at December 31, 2024, was $210 million. Required: 1. Suppose Moody’s bond rating agency downgraded the risk rating of the bonds motivating Tanner-UNF to sell the investment on January 2, 2025, for $190 million. Prepare the journal entry to record the sale.INVESTMENT AT AMORTIZED COST CASE III: On January 1, 2026, ABC purchased 9% bonds with a face amount of P4M to yield 10%. The bonds are dated January 1, 2026, 2024, mature on December 31, 2035 and pay interest annually on December 31. The entity used the interest method. What should be reported as interest revenue for 2026?
- 8.Use the following information to answer item 38 and 39: On Jan 1, 2021, ABC Company purchased 5-year bonds with face value of P8,000,000 and stated interest of 10% per year payable semi-annually Jan 1 and July 1. The bonds were acquired to yield 8%. Present value factors are A.8,652,400 B.8,000,000 C.8,662,400 D.8,642,400On July 1, 20x3, Wenna Inc. purchased as a short-term investment a P 1,000,000 face value Keizen Co. 8% bond for P 910,000 plus accrued interest to yield 10%. The bonds mature on January 1, 20x10, pay interest annually on January 1, and are classified as Debt Investments @ Fair Value through Profit or Loss. On December 31, 20x3, the bonds had a fair value of P 945,000. On February 13, 20x4, Wenna sold the bonds for P 920,000. On July 1, 20x3, how much cash was paid by Wenna Inc. in connection with the purchase of the Debt Investments?37. On January 1, 20x1, Impressed Co. acquired 8%, F1,000,000 face amount, 4-year 'term' bonds for P936,603. The bonds are measured at amortized cost and have a yield rate of 10%. How much is the carrying amount of the investment on December 31, 20x2? a. 1,000,000 b. 950,263 c. 965,289 d. 981,818
- INVESTMENT AT AMORTIZED COST CASE IV: On January 1, 2026, ABC purchased serial bonds with face amount of P5M and stated interest at 12%. The stated interest is payable annually on December 31. The bonds are acquired to have an effective yield at 10%. The bonds mature at annual installment of P1,250,000 every December 31. What is the market price of the serial bonds on the acquisition date?CASE VI: On January 1, 2026, ABC acquired the entire P4M issue of 12% serial bonds to be held as financial assets at amortized cost. Bonds of P1M mature at annual interval beginning December 31, 2026. Interest is payable annually on December 31. The bonds have 14% effective rate. There is no established purchase price of the bonds. Compute the 1. Initial amount of the investment 2. Carrying value of the investment at the end of 2026. 3. Interest income for the year 2027. 4. Carrying value of the investment at the end of 2027.Problem #4 On February 1, 2021 Leslie's Linguine Ltd. purchased 630, 10-yr, $1,000 bonds for an amount which would generate a 5.0% annual rate of return. The bonds pay interest at an annual rate of 5.2% and the investment was purchased at a price Interest payments are made semi-annually on Feb. 1st and Aug. 1st. The investment is classified as Held to Maturity Securities. 1-Feb-21 Bond purchase 1-Aug-21 First semi-annual interest payment is received and amortization of discount or premium is recorded using the effective interest method. 31-Dec-21 The bonds are trading at $1,014 as of December 31, 2021 which is the company's year end. Interest is accrued. 1-Feb-22 Second semi-annual interest payment is received and amortization of discount or premium is recorded using the effective interest method. Instructions: Draft the appropriatejournal entries for the dates listed above.
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