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No Date General Journal Debit Credit 1 January 01, 2024 Investment in bonds 340,000 Discount on bond investment 25,292 Cash 314,708 2 June 30, 2024 Cash Discount on bond investment Interest revenue 3 June 30, 2024 Loss on investment (unrealized, NI) Fair value adjustment 4 December 31, 202 Cash Discount on bond investment Interest revenue >> 8,500 941 9,441 6,800 × 6,800 8,500 969 9,469 5 December 31, 202 Loss on investment (unrealized, NI) 10,200 Fair value adjustment

No Date General Journal Debit Credit 1 January 01, 2024 Investment in bonds 340,000 Discount on bond investment 25,292 Cash 314,708 2 June 30, 2024 Cash Discount on bond investment Interest revenue 3 June 30, 2024 Loss on investment (unrealized, NI) Fair value adjustment 4 December 31, 202 Cash Discount on bond investment Interest revenue >> 8,500 941 9,441 6,800 × 6,800 8,500 969 9,469 5 December 31, 202 Loss on investment (unrealized, NI) 10,200 Fair value adjustment

Financial Accounting: The Impact on Decision Makers
Financial Accounting: The Impact on Decision Makers
10th Edition
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Gary A. Porter, Curtis L. Norton
Chapter10: Long-term Liabilities
Section: Chapter Questions
Problem 10.10E
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On January 1, 2024, Ithaca Corporation purchases Cortland Incorporated bonds that have a face value of $340,000. The Cortland bonds have a stated interest rate of 5%. Interest is paid semiannually on June 30 and December 31, and the bonds mature in 10 years. For bonds of similar risk and maturity, the market yield on particular dates is as follows:
 
Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)
 
January 1, 2024 6.0%
June 30, 2024 7.0%
December 31, 2024 8.0%
Part 3C: Record the fair value adjustment when the market yield is 7%.
Part 3E: Record the fair value adjustment when the market yield is 8%.
 
\table[[No,Date,General Journal,Debit,Credit],[1,January 01, 2024,Investment in bonds,2,340,000⨀,],[,,Discount on bond investment,2,,25,292↷
No Date General Journal Debit Credit 1 January 01, 2024 Investment in bonds 340,000 Discount on bond investment 25,292 Cash 314,708 2 June 30, 2024 Cash Discount on bond investment Interest revenue 3 June 30, 2024 Loss on investment (unrealized, NI) Fair value adjustment 4 December 31, 202 Cash Discount on bond investment Interest revenue >> 8,500 941 9,441 6,800 × 6,800 8,500 969 9,469 5 December 31, 202 Loss on investment (unrealized, NI) 10,200 Fair value adjustment
Transcribed Image Text:No Date General Journal Debit Credit 1 January 01, 2024 Investment in bonds 340,000 Discount on bond investment 25,292 Cash 314,708 2 June 30, 2024 Cash Discount on bond investment Interest revenue 3 June 30, 2024 Loss on investment (unrealized, NI) Fair value adjustment 4 December 31, 202 Cash Discount on bond investment Interest revenue >> 8,500 941 9,441 6,800 × 6,800 8,500 969 9,469 5 December 31, 202 Loss on investment (unrealized, NI) 10,200 Fair value adjustment
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