(a) (b) (c) Prepare the journal entry at the date of the bond purchase. Prepare the journal entries to record the interest received and recognition of fair value for 2025. Prepare the journal entry to record the recognition of fair value for 2026.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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On January 1, 2025, Carla Vista Company purchased 6% bonds, having a maturity value of $600,000 for $518,458. The bonds provide
the bondholders with a 8% yield. They are dated January 1, 2025, and mature January 1, 2035, with interest receivable June 30 and
December 31 of each year. Carla Vista Company uses the effective-interest method to allocate unamortized discount or premium. The
bonds are classified as available-for-sale. The fair value of the bonds at December 31 of each year-end is as follows.
2025 $519,000 2028
514,000 2029
2026
2027
(a)
(b)
(c)
509,000
$539,000
559,000
Prepare the journal entry at the date of the bond purchase.
Prepare the journal entries to record the interest received and recognition of fair value for 2025.
Prepare the journal entry to record the recognition of fair value for 2026.
(Round answers to 0 decimal places, e.g. 2,525. Credit account titles are automatically indented when the 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. List all debit entries before credit entries.)
Transcribed Image Text:On January 1, 2025, Carla Vista Company purchased 6% bonds, having a maturity value of $600,000 for $518,458. The bonds provide the bondholders with a 8% yield. They are dated January 1, 2025, and mature January 1, 2035, with interest receivable June 30 and December 31 of each year. Carla Vista Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified as available-for-sale. The fair value of the bonds at December 31 of each year-end is as follows. 2025 $519,000 2028 514,000 2029 2026 2027 (a) (b) (c) 509,000 $539,000 559,000 Prepare the journal entry at the date of the bond purchase. Prepare the journal entries to record the interest received and recognition of fair value for 2025. Prepare the journal entry to record the recognition of fair value for 2026. (Round answers to 0 decimal places, e.g. 2,525. Credit account titles are automatically indented when the 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. List all debit entries before credit entries.)
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