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
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter9: Long-term Liabilities
Section: Chapter Questions
Problem 99PSA
Related questions
Question
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
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Recommended textbooks for you
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
Financial Accounting
Accounting
ISBN:
9781337272124
Author:
Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:
Cengage Learning
Financial Accounting
Accounting
ISBN:
9781305088436
Author:
Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:
Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
Financial Accounting
Accounting
ISBN:
9781337272124
Author:
Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:
Cengage Learning
Financial Accounting
Accounting
ISBN:
9781305088436
Author:
Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:
Cengage Learning
Financial Accounting: The Impact on Decision Make…
Accounting
ISBN:
9781305654174
Author:
Gary A. Porter, Curtis L. Norton
Publisher:
Cengage Learning
College Accounting, Chapters 1-27
Accounting
ISBN:
9781337794756
Author:
HEINTZ, James A.
Publisher:
Cengage Learning,
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning