On January 1, 2014, Dubai Corporation purchased 12% bonds, having a maturity value of $600,000, for $645,489. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2014, and mature January 1, 2019, with interest receivable December 31 of each year. Dubai Corporation uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category. Instructions (a) Prepare the journal entry on the date of the bond purchase (b) Prepare a bond amortization schedule. (c) Prepare the journal entry to record the interest received and the amortization for all the years

On January 1, 2014, Dubai Corporation purchased 12% bonds, having a maturity value of $600,000, for $645,489. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2014, and mature January 1, 2019, with interest receivable December 31 of each year. Dubai Corporation uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category. Instructions (a) Prepare the journal entry on the date of the bond purchase (b) Prepare a bond amortization schedule. (c) Prepare the journal entry to record the interest received and the amortization for all the years

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

On January 1, 2020, Teal Company purchased 9% bonds having a maturity value of $370,000, for $400,342.96. The bonds provide the bondholders with a 7% yield. They are dated January 1, 2020, and mature January 1, 2025, with interest received on January 1 of each year. Teal Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category.
On January 1, 2020, Sage Company purchased 11% bonds, having a maturity value of $ 301,000 for $ 324,415.24. The bonds provide the bondholders with a 9% yield. They are dated January 1, 2020, and mature January 1, 2025, with interest received on January 1 of each year. Sage Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified as available-for-sale category. The fair value of the bonds at December 31 of each year-end is as follows. 2020 $ 322,200 2023 $ 310,900 2021 $ 309,800 2024 $ 301,000 2022 $ 308,900 (a) Prepare the journal entry at the date of the bond purchase. (b) Prepare the journal entries to record the interest revenue and recognition of fair value for 2020. (c) Prepare the journal entry to record the recognition of fair value for 2021. (Round answers to 2 decimal places, e.g. 2,525.25. Credit account titles are automatically indented when amount is…
On January 1, 2022, Bramble and Lois Company purchased 12% bonds having a maturity value of $234,000 for $251,740.88. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2022, and mature on January 1, 2027, with interest receivable on December 31 of each year. Bramble and Lois Company uses the effective interest method to allocate unamortized discount or premium. The bonds are carried at FV-OCI. The fair value of the bonds at December 31 of each year-end is as follows: 2022 $250,000 $241,000 2023 Your answer is partially correct. Prepare the journal entries to record the recognition of fair value for 2023 and assuming the investment is sold for $241,000 on December 31, 2023, reclassifying any accumulated holding gains or losses to net income. (Credit account titles are automatically indented when the 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. List all debit entries…
On January 1, 2016, Mary Co. issued its 10% bonds in the face amount of P 1,500,000 which mature on January 1, 2026. The bonds were issued for P 1,329,000 to yield 12%. Mary uses the effective interest method of amortizing bond discount. Interest is payable semi-annually on July 1 and January 1. For the year ended December 31, 2016 what amount should reported as bonds interest expense?
On January 1, 2020, Hummer Company purchased 7% bonds, having a maturity value of $500,000, for $570,000. The bonds provide the bondholders with a 5% yield. They are dated January 1, 2020, and mature January 1, 2030, with interest receivable June 30 and December 31 of each year. Hummer Company uses the effective- interest method to allocate any unamortized discount or premium. The bonds are classified in the held-to-maturity category. Instructions: 1. Prepare the journal entry at the date of the bond purchase. 2. Prepare the first 3 years of a bond amortization schedule. 3. Prepare the journal entries to record the interest received and the amortization for 2020.
Ellis Company issues 6.5%, five-year bonds dated January 1, 2021, with a $250,000 par value. The bonds pay interest on June 30 and December 31 and are issued at a price of $255,333. The annual market rate is 6% on the issue date. Required: 1. Compute the total bond interest expense over the bonds' life. 2. Prepare an effective interest amortization table for the bonds' life. 3. Prepare the journal entries to record the first two interest payments.
On April 1, 2016, Lanz Company issued at 99 plus accrued interest, 200 of its 8%, P 1,000 bonds. The bonds are dated January 1, 2016, mature on January 1, 2026, and pay interest on July 1 and January 1. Lanz paid bond issue costs of P7,000. From the bond issuance, Lanz received net cash of –
I need the journal entrys for these Five-year 6% bonds were issued on January 1, 2018, sold to yield 8% interest. Interest is paid semiannually on January 1 and June 30 for these bonds. Maturity value of the bond issue is $100,000 and the issue was sold at a discount of $8,111 for an initial carrying value of $91,889. The bond indenture indicated that GeneralProducts may later call and redeem these bonds @101 any time after June 30, 2019. These bonds were subsequently called and redeemed on September 1, 2019, following the sale of a new 5% bond issue taking advantage of lower interest rates (see Item 5 below). The effective-interest method is applied to amortize the discount. To take advantage of lower interest rates and to finance the call and redemption of the previously issued 6% bonds @ 101, on September 1, 2019, GeneralProducts issued new 5% bonds with face value of $100,000 to yield 6%. The maturity period of these new 5% bonds is 10 years and interest is paid semiannually on…
On December 1, 2017, Cone Company issued its 9%, $450,000 face value bonds for $520,000, plus accrued interest. Interest is payable on November 1 and May 1. On December 31, 2019, the book value of the bonds, inclusive of the unamortized premium, was $480,000. On July 1, 2020, Cone reacquired the bonds at 99 plus accrued interest. Cone appropriately uses the straight-line method for the amortization because the results do not materially differ from those of the effective interest method. Requirement: Book value of bonds on December 1, 2017 _______ Book value of bonds on December 31, 2019 _______ Amortization for 25 months _______ Monthly amortization _______ Book value of bonds on December 31, 2019 ________ Amortization for January 1 to July 1, 2020 ________ Book value of bonds on July 1, 2020 ________ Cost of reacquisition ________ Gain on bond redemption
On January 1, 2020, Stellar Company purchased 12% bonds, having a maturity value of $325,000 for $349,639.81. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2020, and mature January 1, 2025, with interest received on January 1 of each year. Stellar Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified as available-for-sale category. The fair value of the bonds at December 31 of each year-end is as follows. 2020 $347,400 2023 $334,900 2021 $333,800 2024 $325,000 2022 $332,800 (a) Prepare the journal entry at the date of the bond purchase. (b) Prepare the journal entries to record the interest revenue and recognition of fair value for 2020. (c) Prepare the journal entry to record the recognition of fair value for 2021.
Grocery Corporation received $300,328 for 11 percent bonds issued on January 1, 2021, at a market interest rate of 8 percent. The bonds had a total face value of $250,000, stated that interest would be paid each December 31, and stated that they mature in 10 years. Assume Grocery Corporation uses the effective-interest method to amortize the bond premium. Required: 1. & 2. Prepare the required journal entries to record the bond issuance and the first interest payment on December 31. (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.) 1. Record the issuance of bonds with a face value of $250,000 for $300,328. 2. Record the interest payment on December 31.
On January 1, 2020, Wildhorse Company purchased 8% bonds having a maturity value of $ 360,000, for $ 390,329.57. The bonds provide the bondholders with a 6% yield. They are dated January 1, 2020, and mature January 1, 2025, with interest received on January 1 of each year. Wildhorse Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category. Prepare the journal entry to record the interest revenue and the amortization at December 31, 2020. (Round answers to 2 decimal places, e.g. 2,525.25. 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.)