Entries for TS: Effective Interest MethodOn July 1 of Year 1, West Company purchased for cash, 16, $10,000 bonds of North Corporation at a market rate of 6%. The bonds pay 5% interest, payable on a semiannual basis each July 1 and January 1, and mature in threeyears on July 1. The bonds are classified as trading securities. West Company's annual reporting period ends December 31. Assume the effective interest method of amortization of any discounts or premiums.Note: When answering the following questions, round answers to the nearest whole dollar.Amortization ScheduleJournal Entries in Year 1Journal Entries in Year 2d. Record the receipt of interest on January 1 of Year 2.DateJan. 1, Year 2Account NameDr.Cr.00 %00 ×To record the receipt of interest.e. Record the sale of all of the bonds on January 2 of Year 2 for $166,100.DateJan. 2, Year 2Account NameTo record the sale of investments.> > >Dr.Cr.00 ×00x00 xf. Record the adjustment to the Fair Value Adjustment account on December 31 of Year 2, assuming no additional TS investments.DateDec. 31, Year 2Account NameTo adjust FVA account.Dr.Cr.00 x00 × Entries for TS: Effective Interest Method Note: When answering the following questions, round answers to the nearest whole dollar. Amortization Schedule Journal Entries in Year 1, Journal Entries in Year 2 d. Record the receipt of interest onJanuary 1 of Year 2. e. Record the sale of all of the bonds on January 2 of Year 2 for $166, 100. f. Record the adjustment to the Fair Value Adjustment account on December 31 of Year 2, assuming no additional TS investments.

1) Value of Bond :Value of Bond is nothing present value of all future bond cash flows (Interest and…

Answered: d. Record the receipt of interest on…

Business

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d. Record the receipt of interest on January 1 of Year 2.

FINANCIAL ACCOUNTING

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ISBN:9781259964947

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Chapter1: Financial Statements And Business Decisions

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Question

Entries for TS: Effective Interest Method
On July 1 of Year 1, West Company purchased for cash, 16, $10,000 bonds of North Corporation at a market rate of 6%. The bonds pay 5% 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 trading securities. West Company's annual reporting period ends December 31. Assume the effective interest method of amortization of any discounts or premiums.
Note: When answering the following questions, round answers to the nearest whole dollar.
Amortization Schedule
Journal Entries in Year 1
Journal Entries in Year 2
d. Record the receipt of interest on January 1 of Year 2.
Date
Jan. 1, Year 2
Account Name
Dr.
Cr.
0
0 %
0
0 ×
To record the receipt of interest.
e. Record the sale of all of the bonds on January 2 of Year 2 for $166,100.
Date
Jan. 2, Year 2
Account Name
To record the sale of investments.
> > >
Dr.
Cr.
0
0 ×
0
0x
0
0 x
f. Record the adjustment to the Fair Value Adjustment account on December 31 of Year 2, assuming no additional TS investments.
Date
Dec. 31, Year 2
Account Name
To adjust FVA account.
Dr.
Cr.
0
0 x
0
0 ×

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