Blossom Company purchased $1180000 of8%, 5-year bonds from Carlin, Inc. on January1, 2021, with interest payable on July 1 andJanuary 1. The bonds sold for $1230096 at aneffective interest rate of 7%. Using theeffective interest method, Blossom Companydecreased the Available-for-Sale DebtSecurities account for the Carlin, Inc. bondson July 1, 2021 and December 31, 2021 by theamortízed premiums of $4048 and $4192,respectively. At February 1, 2022, BlossomCompany sold the Carlin bonds for $1215800.After accruing for interest, the carrying valueof the Carlin bonds on February 1, 2022 was$1220500. Assuming Blossom Company has aportfolio of available-for-sale debtinvestments, what should Blossom Companyreport as a gain (or loss) on the bonds?$-4700.$0.$-9596.$-14296.

Bonds refers to the units of corporate debts which are issued by companies and also securitized…

Blossom Company purchased $1180000 of 8%, 5-year bonds from Carlin, Inc. on January 1, 2021, with interest payable on July 1 and January 1. The bonds sold for $1230096 at an effective interest rate of 7%. Using the effective interest method, Blossom Company decreased the Available-for-Sale Debt Securities account for the Carlin, Inc. bonds on July 1, 2021 and December 31, 2021 by the amortized premiums of $4048 and $4192,

Blossom Company purchased $1180000 of 8%, 5-year bonds from Carlin, Inc. on January 1, 2021, with interest payable on July 1 and January 1. The bonds sold for $1230096 at an effective interest rate of 7%. Using the effective interest method, Blossom Company decreased the Available-for-Sale Debt Securities account for the Carlin, Inc. bonds on July 1, 2021 and December 31, 2021 by the amortized premiums of $4048 and $4192,

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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On July 1, 2020, West Company purchased for cash, three $10,000 bonds of North Corporation at a market rate of 4%. The bonds pay 5% interest, payable on a semiannual basis each July 1 and January 1, and mature on July 1, 2023. The bonds are classified as trading securities. The annual reporting period ends December 31. Assume the effective interest method of amortization of any discounts or premiums. Ignore income taxes. d. Record the receipt of interest on January 1, 2021. e. Record the sale of all of the bonds on January 2, 2021, for $33,200. f. Record the adjustment to the Fair Value Adjustment account on December 31, 2021, assuming no additional TS investments. Note: List multiple debits or credits (when applicable) in alphabetical order. Note: Round each amount to the nearest whole dollar. Note: If a journal entry isn't required for the transaction, select "N/A" as the account names and leave the Dr. and Cr. answers blank (zero).
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On January 1, 2020, Hummer Company purchased 7% bonds, having a maturity value of $500,000, for $570,000. The bonds provide the bondholders with a 5% yield. They are dated January 1, 2020, and mature January 1, 2030, with interest receivable June 30 and December 31 of each year. Hummer Company uses the effective- interest method to allocate any unamortized discount or premium. The bonds are classified in the held-to-maturity category. Instructions: 1. Prepare the journal entry at the date of the bond purchase. 2. Prepare the first 3 years of a bond amortization schedule. 3. Prepare the journal entries to record the interest received and the amortization for 2020.
Do not use Ai
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