Carrying Amount of Bonds Cash Interest Bond Premium Date Received Revenue Amortization 12/31/15 12/31/16 12/31/17 12/31/18 12/31/19 12/31/20 $7,000 7,000 7,000 7,000 7,000 $5,433 5,354 5,272 5,186 5,095 $1,567 1,646 1,728 1,814 1,905 $108,660 107,093 105,447 103,719 101,905 100,000 The following schedule presents a comparison of the amortized cost and fair value of the bonds at year-end. 12/31/16 12/31/17 12/31/18 12/31/19 12/31/20 $107,093 106,500 Amortized cost $105,447 107,500 $103,719 $101,905 $100,000 100,000 Fair value 105,650 103,000
(Debt Securities) Presented below is an amortization schedule related to Spangler Company’s 5-year, $100,000 bond with a 7% interest rate and a 5% yield, purchased on December 31, 2015, for $108,660.
Check the below image for schedule.
Instructions
(a) Prepare the
(b) Prepare the journal entry(ies) related to the held-to-maturity bonds for 2016.
(c) Prepare the journal entry(ies) related to the held-to-maturity bonds for 2018.
(d) Prepare the journal entry(ies) to record the purchase of these bonds, assuming they are classified as available for-sale.
(e) Prepare the journal entry(ies) related to the available-for-sale bonds for 2016.
(f) Prepare the journal entry(ies) related to the available-for-sale bonds for 2018.
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