Garfield Company purchased, on January 1, 2020, as a held-to-maturity investment, $80,000 of the 9%,5-year bonds of Chester Corporation for $74,086, which provides an 11% return. Prepare Garfield's journalentries for (a) the purchase of the investment, and (b) the receipt of annual interest and discountamortization. Assume effective-interest amortization is used.Please show in Excel and prepared the amortization scheduled in excel also

When an investor purchases a bond or other fixed-income security with the intention of holding it…

Answered: Garfield Company purchased, on January…

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 April 1, 2021, Eminem Company purchased 4,000 of the P1,000 face amount, 8% bonds of Stan Company for P3,692,000 to yield 10% per annum. The bonds, which mature on April 1, 2026, pay interest semiannually on April 1 and October 1. Eminem classifies the securities as at amortized cost. What is the investment carrying value at December 31, 2021?
On J anuary 1, 2019, kelly Corporation acquired bonds wiili a face value of $500,000 for $483841.79, a price that yields a 10% effective annual interest rate. The bonds carry a 9% stated rate of interest, pay interest semiannually on June 30 and December 31, are due December 31, 2022, and are being held to maturity. Prepare journal entries to record the purchase of the bonds and the first two interest receipts using the: 1. straight-line method of amortization 2. effective interest metl1od of amortization
On January 1, 2019, Mark Corporation purchased bonds with a face value of $500,000 for $475,413.60. The bonds are due December 31, 2021, carry a 10% stated rate, and were purchased to yield 12%. interest is payable semiannually on June 30 and December 31. On January 1, 2021, in contemplation of a major acquisition,one-fourth of the bonds were sold for $127,000. The remainder were held until maturity. Prepare journal entries to record purchase of the bonds, each interest pay ment，the partial sale of the investment on January 1, 2021 , and the retirement of the bond issue on December 31, 2021.
In 2021 and 2022, Norman Company had the following transactions related to investments in bonds.2021 Apr. 1 Purchased $400,000 of 8% bonds issued by JS, Inc. at face value. Interest is payable semiannually on September 30 and March 31. June 1Purchased $500,000 of 12% bonds issued by Okla Co. at face value. Interest is payable semiannually on November 30 and May 31. Sept. 30 Received semiannual interest payment from JS, Inc. Nov. 30 Received semiannual interest payment from Okla Co.Dec. 31 Recorded any necessary adjusting entries relating to the investments.
On January 1, 2020, Flounder Company purchased $330,000, 8% bonds of Aguirre Co. for $304,517. The bonds were purchased to yield 10% interest. Interest is payable semiannually on July 1 and January 1. The bonds mature on January 1, 2025. Flounder Company uses the effective-interest method to amortize discount or premium. On January 1, 2022, Flounder Company sold the bonds for $306,162 after receiving interest to meet its liquidity needs. (a) Your answer is correct. Prepare the journal entry to record the purchase of bonds on January 1. Assume that the bonds are classified as available-for-sale. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit Jan. 1, Debt Investments 304,517 2020 Cash 304,517
An investor company purchased $427,000 of 8% bonds from the investee company on January 1, 2020, with interest payable on December 31. The bonds were classified as Available-for-Sale. The bonds sold for $706,390. Using the effective-interest method, the investor company revised the Available-for-Sale Debt Securities account on December 31, 2020 and December 31, 2021 by the amortized discount/premium of $6,470. and $8,200, respectively. At December 31, 2020, the fair value of the investee company bonds was $912,000. At December 31, 2021, the fair value of the investee company bonds was $843,000. What is the amount of unrealized holding gain/loss related to this investment in 2021? (Very important: Just enter the amount. DO NOT put a plus or minus sign in front of the amount.)
Instructions On January 2, 2020, Mark Company acquired, as a held-to-maturity investment, bonds with a face value of $500,000 for $562,300. The bonds carry a stated interest rate of 12% and an effective yield of 10%. Interest is paid on June 30 and December 31, and the bonds mature on December 31, 2029. Required: Prepare the jourmal entries necessary to record the purchase of the bonds and the first two semi-annual interest receipts using the straight-line method of amortization.
On January 1, 2019, Bixby Inc. acquired an investment classified as FVOCI for P2,159,708, which has a principal amount of P2,000,000 and with 10% interest payable every December 31 starting 2019. The investment runs in three years. The fair value of the bonds are: December 31, 2019 - 102; December 31, 2020-98; December 31, 2021 - 101. Which of the following statements is true? O Other comprehensive income increased by P92,484.64 on year 2019. O None of these O Other comprehensive income decreased by P91,753.33 on year 2021. O Other comprehensive income increased by P50,598.77 on year 2020.
Atif purchased on January 1, 2019, as a held-for-collection investment, OMR 75,000 of the 8%, 5-year bonds of Sohar Plc. for OMR 81,398, which provides a 6% return. The bonds pay interest semiannually. Prepare Atif’s journal entries for: (a) the purchase of the investment, and (b) the receipt of semiannual interest and premium amortization.
On January 1, 2022, BTS Company purchased as debt investments at amortized cost, P1,000,000 of JK Company’s 8% for 906,000. The bonds were purchased to yield 10% interest. The bonds mature on January 1, 2032 and pay interest semi-annually on January 1 and July 1. BTS uses the effective interest method of amortization. In its December 31, 2022 statement of comprehensive income, what amount should BTS report as interest revenue?
On January 1, 2020, Splish Company purchased $300,000, 6% bonds of Cabana Co. for $313,128. The bonds were purchased to yield 5% interest. Interest is payable semiannually on July 1 and January 1. The bonds mature on January 1, 2025. Splish Company uses the effective-interest method to amortize discount or premium. On January 1, 2022, Splish Company sold the bonds for $305,400 after receiving interest to meet its liquidity needs.
On June 1, 2020, LM company purchased debt investment at amortized cost, 8,000 of P1,000 face value bonds for P7,383,000. The bonds were purchased to yield 10%. Interest is payable semi-annually on December 1 and June 1. On June 1, 2021, LM sold the bonds for P7,850,000. This amount includes the appropriate accrued interest. How much is the gain or loss on the sale of the debt investment?

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