(a) (b) (c) Prepare the journal entry at the date of the bond purchase. Prepare the journal entries to record the interest revenue and recognition of fair value for 2025. Prepare the journal entry to record the recognition of fair value for 2026.
(a) (b) (c) Prepare the journal entry at the date of the bond purchase. Prepare the journal entries to record the interest revenue and recognition of fair value for 2025. Prepare the journal entry to record the recognition of fair value for 2026.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable
Section: Chapter Questions
Problem 16E
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Question
![On January 1, 2025, Pronghorn Company purchased 11% bonds having a maturity value of $312,000 for $336,270.95. The bonds
provide the bondholders with a 9% yield. They are dated January 1, 2025, and mature January 1, 2030, with interest received on
January 1 of each year. Pronghorn 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.
2025
$333,900
2026 $320,900 2029
2027 $320,000
2028
$321,800
$312,000
(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 2025.
(c)
Prepare the journal entry to record the recognition of fair value for 2026.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F9e546a57-d608-4daf-bcb6-0d37cdb45616%2F1acbb637-4da2-4115-a0ab-4af1397b3c9e%2Fz2rvp2_processed.jpeg&w=3840&q=75)
Transcribed Image Text:On January 1, 2025, Pronghorn Company purchased 11% bonds having a maturity value of $312,000 for $336,270.95. The bonds
provide the bondholders with a 9% yield. They are dated January 1, 2025, and mature January 1, 2030, with interest received on
January 1 of each year. Pronghorn 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.
2025
$333,900
2026 $320,900 2029
2027 $320,000
2028
$321,800
$312,000
(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 2025.
(c)
Prepare the journal entry to record the recognition of fair value for 2026.
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