●Assume Sunset Company purchased this entire bond issue sold y Omar, i.e., 7% of $1,000,000 bonds, at $913,540on January 1,2024. Market yield was 8% and interest is paid semiannually on June 30 and December 31. Sunset isholding the bond investment as trading securities. The fair value of the bonds on December 31, 2024 is $920,000.1. At what amount will Sunset report this investment in the December 31, 2024 balance sheet?2. What is the amount related to the bond investment that Sunset will report in its income statement for the yearended December 31, 2024? (Ignore income taxes.)3. What is the amount related to the bond investment that Sunset will report in its statement of cash flows for theyear ended December 31, 2024? Be sure to list the category of activity in which the cash flow is in.activitiesactivities

There are two questions but only first question is solved due to our protocol.The bonds expense…

Answered: Assume Sunset Cor on January 1,2024.…

Assume Sunset Cor on January 1,2024. holding the bond in 1. At what amoun 2. What is the am ended Decemb 3. What is the am year ended Dec

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.

Question

●
Assume Sunset Company purchased this entire bond issue sold y Omar, i.e., 7% of $1,000,000 bonds, at $913,540
on January 1,2024. Market yield was 8% and interest is paid semiannually on June 30 and December 31. Sunset is
holding the bond investment as trading securities. The fair value of the bonds on December 31, 2024 is $920,000.
1. At what amount will Sunset report this investment in the December 31, 2024 balance sheet?
2. What is the amount related to the bond investment that Sunset will report in its income statement for the year
ended December 31, 2024? (Ignore income taxes.)
3. What is the amount related to the bond investment that Sunset will report in its statement of cash flows for the
year ended December 31, 2024? Be sure to list the category of activity in which the cash flow is in.
activities
activities

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Problem 9-5A (Algo) Part 2 2. If the market interest rate is 7%, the bonds will issue at $357,290. Record the bond issue on January 1, 2024, and the first two semiannual interest payments on June 30, 2024, and December 31, 2024. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field. Round your answers to the nearest dollar amount.) 1 Required information Problem 9-5A (Algo) Record bond issue and related interest (LO9-5) [The following information applies to the questions displayed below.] No 2 On January 1, 2024, Twister Enterprises, a manufacturer of a variety of transportable spin rides, issues $400,000 of 6% bonds, due in 20 years, with interest payable semiannually on June 30 and December 31 each year. 3 Date January 01, 2024 Cash June 30, 2024 Bonds Payable Interest Expense Cash December 31, 202 Interest Expense Cash Answer is not complete. General Journal. 10 30 00 O Debit 357,290 12,505 12.505 Credit 357,290 x…