On 1 January 20X2, Speedy Company purchased $4,700,000 of Wind Corp. 3% bonds, classified as an FVOCI-Bond investment for $4,288,653. The bonds pay semi-annual interest each 30 June and 31 December. The market interest rate was 5% on the date of purchase. The bonds mature on 31 December 20X6. At the end of 20X2, the bonds had a fair value of $4,600,000. On 1 July 20X3, Speedy sold the bonds for $4,660,000. Required: 1. Construct a table that shows interest revenue reported by Speedy for the first three interest periods. Use the effective-interest method. Bond Period Cash Payment 2.5% Interest Discount Revenue Amortization Carrying Value 0 1 2 3 + 2. Prepare the entries for the first year assuming that the investment is classified as FVOCI-Bond. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to the nearest whole dollar amount.) View transaction list 1 Record the Interest received on June 30. 2 Record the Interest on December 31. 3 Record the adjust to fair value at December 31, 20X2. ☑ ebit Credit
On 1 January 20X2, Speedy Company purchased $4,700,000 of Wind Corp. 3% bonds, classified as an FVOCI-Bond investment for $4,288,653. The bonds pay semi-annual interest each 30 June and 31 December. The market interest rate was 5% on the date of purchase. The bonds mature on 31 December 20X6. At the end of 20X2, the bonds had a fair value of $4,600,000. On 1 July 20X3, Speedy sold the bonds for $4,660,000. Required: 1. Construct a table that shows interest revenue reported by Speedy for the first three interest periods. Use the effective-interest method. Bond Period Cash Payment 2.5% Interest Discount Revenue Amortization Carrying Value 0 1 2 3 + 2. Prepare the entries for the first year assuming that the investment is classified as FVOCI-Bond. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to the nearest whole dollar amount.) View transaction list 1 Record the Interest received on June 30. 2 Record the Interest on December 31. 3 Record the adjust to fair value at December 31, 20X2. ☑ ebit Credit
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
ksk.6
Transcribed Image Text:On 1 January 20X2, Speedy Company purchased $4,700,000 of Wind Corp. 3% bonds, classified as an FVOCI-Bond investment for
$4,288,653. The bonds pay semi-annual interest each 30 June and 31 December. The market interest rate was 5% on the date of
purchase. The bonds mature on 31 December 20X6. At the end of 20X2, the bonds had a fair value of $4,600,000. On 1 July 20X3,
Speedy sold the bonds for $4,660,000.
Required:
1. Construct a table that shows interest revenue reported by Speedy for the first three interest periods. Use the effective-interest
method.
Bond
Period
Cash
Payment
2.5% Interest Discount
Revenue Amortization
Carrying
Value
0
1
2
3
+
2. Prepare the entries for the first year assuming that the investment is classified as FVOCI-Bond. (If no entry is required for a
transaction/event, select "No journal entry required" in the first account field. Round your answers to the nearest whole dollar
amount.)
View transaction list
1 Record the Interest received on June 30.
2
Record the Interest on December 31.
3
Record the adjust to fair value at December 31, 20X2.
☑
ebit
Credit
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