(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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![On January 1, 2025, Shamrock Company purchased 12% bonds having a maturity value of $284,000 for $305,531.40. The bonds
provide the bondholders with a 10% yield. They are dated January 1, 2025, and mature January 1, 2030, with interest received on
January 1 of each year. Shamrock 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 $303,400 2028 $293,200
2026
$292,200 2029
$284,000
$291,200
2027
(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.
(List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually.
If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round answers to 2 decimal places, 1225.25.)
No.
(a)
(b)
(c)
Date
Account Titles and Explanation
(To record interest received)
(To record fair value adjustment)
Debit
1440
Cred](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fbf019715-463c-43e2-83f6-e22af19edc6b%2F40829976-bc9b-4e85-9c0c-c1f9c9b97cd0%2Fjsef1j_processed.png&w=3840&q=75)
Transcribed Image Text:On January 1, 2025, Shamrock Company purchased 12% bonds having a maturity value of $284,000 for $305,531.40. The bonds
provide the bondholders with a 10% yield. They are dated January 1, 2025, and mature January 1, 2030, with interest received on
January 1 of each year. Shamrock 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 $303,400 2028 $293,200
2026
$292,200 2029
$284,000
$291,200
2027
(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.
(List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually.
If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round answers to 2 decimal places, 1225.25.)
No.
(a)
(b)
(c)
Date
Account Titles and Explanation
(To record interest received)
(To record fair value adjustment)
Debit
1440
Cred
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