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b. Record the entry for the purchase of the bonds by West Company on July 1. Date Account Name Jul. 1, Year 1 Investment in HTM Securities Cash To record investment purchase. Debit 77,970 0 Credit 0 77,970 c. Record the adjusting entry by West Company on December 31. The fair value of the bonds at December 31 was $81,000. Date Account Name Dec. 31, Year 1 Investment in HTM Securities Interest Receivable Interest Revenue To record year end adjusting entry. Debit Credit 299 0 x 3,600 0 ✓ 0 3,899 x a. Prepare a bond amortization schedule for the current year and the following year using the straight-line interest method. Note: Round each amount entered into the schedule below to the nearest whole dollar. Date Stated Interest Market Interest Discount Bond Amortization Amortized Cost Jul. 1, Year 1 $ 77,970 Jan. 1, Year 2 $ 3,600 $ Jul. 1, Year 2 3,600 3,899 * $ 3,913 x 299 x 78,269 x 313 x 78,582 x

b. Record the entry for the purchase of the bonds by West Company on July 1. Date Account Name Jul. 1, Year 1 Investment in HTM Securities Cash To record investment purchase. Debit 77,970 0 Credit 0 77,970 c. Record the adjusting entry by West Company on December 31. The fair value of the bonds at December 31 was $81,000. Date Account Name Dec. 31, Year 1 Investment in HTM Securities Interest Receivable Interest Revenue To record year end adjusting entry. Debit Credit 299 0 x 3,600 0 ✓ 0 3,899 x a. Prepare a bond amortization schedule for the current year and the following year using the straight-line interest method. Note: Round each amount entered into the schedule below to the nearest whole dollar. Date Stated Interest Market Interest Discount Bond Amortization Amortized Cost Jul. 1, Year 1 $ 77,970 Jan. 1, Year 2 $ 3,600 $ Jul. 1, Year 2 3,600 3,899 * $ 3,913 x 299 x 78,269 x 313 x 78,582 x

Financial Accounting: The Impact on Decision Makers
Financial Accounting: The Impact on Decision Makers
10th Edition
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Gary A. Porter, Curtis L. Norton
Chapter10: Long-term Liabilities
Section: Chapter Questions
Problem 10.1E
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On July 1 of the current year, West Company purchased for cash, 8, $10,000 bonds of North Corporation to yield 10%. The bonds pay 9% interest, payable on a semiannual basis each July 1 and January 1, and mature in three years on July 1. The bonds are classified as held-to-maturity securities. The annual reporting period ends December 31. Assume the straight-line interest method of amortization of any discount or premium.

b. Record the entry for the purchase of the bonds by West Company on July 1. Date Account Name Jul. 1, Year 1 Investment in HTM Securities Cash To record investment purchase. Debit 77,970 0 Credit 0 77,970 c. Record the adjusting entry by West Company on December 31. The fair value of the bonds at December 31 was $81,000. Date Account Name Dec. 31, Year 1 Investment in HTM Securities Interest Receivable Interest Revenue To record year end adjusting entry. Debit Credit 299 0 x 3,600 0 ✓ 0 3,899 x
Transcribed Image Text:b. Record the entry for the purchase of the bonds by West Company on July 1. Date Account Name Jul. 1, Year 1 Investment in HTM Securities Cash To record investment purchase. Debit 77,970 0 Credit 0 77,970 c. Record the adjusting entry by West Company on December 31. The fair value of the bonds at December 31 was $81,000. Date Account Name Dec. 31, Year 1 Investment in HTM Securities Interest Receivable Interest Revenue To record year end adjusting entry. Debit Credit 299 0 x 3,600 0 ✓ 0 3,899 x
a. Prepare a bond amortization schedule for the current year and the following year using the straight-line interest method. Note: Round each amount entered into the schedule below to the nearest whole dollar. Date Stated Interest Market Interest Discount Bond Amortization Amortized Cost Jul. 1, Year 1 $ 77,970 Jan. 1, Year 2 $ 3,600 $ Jul. 1, Year 2 3,600 3,899 * $ 3,913 x 299 x 78,269 x 313 x 78,582 x
Transcribed Image Text:a. Prepare a bond amortization schedule for the current year and the following year using the straight-line interest method. Note: Round each amount entered into the schedule below to the nearest whole dollar. Date Stated Interest Market Interest Discount Bond Amortization Amortized Cost Jul. 1, Year 1 $ 77,970 Jan. 1, Year 2 $ 3,600 $ Jul. 1, Year 2 3,600 3,899 * $ 3,913 x 299 x 78,269 x 313 x 78,582 x
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