On January 1, 2019, Ola Company paid $388,900 for a $400,000 face value 3% corporate bond yielding 4%, interest paid annually on December 31, and classified it as held-to-maturity. Ola's reporting year ends December 31. On its 2020 balance sheet, Ola reports the investment at: Select one: O A. $396,154 O B. $398,231 O C. $397,296 4 O D. $395,981

On January 1, 2019, Ola Company paid $388,900 for a $400,000 face value 3% corporate bond yielding 4%, interest paid annually on December 31, and classified it as held-to-maturity. Ola's reporting year ends December 31. On its 2020 balance sheet, Ola reports the investment at: Select one: O A. $396,154 O B. $398,231 O C. $397,296 4 O D. $395,981

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: On January 1, 2021, Ape

A: Bonds are priced by discounting future cash flows. Future cash flows include coupons and par value…

Q: Req 1 Req 2 to 4 Prepare the journal entries to record their issuance by The Bradford Company on…

A: The journal entry can be defined as the very first step where a transaction is entered into books of…

Q: Presented below are selected transactions on the books of Simonson Corporation. May 1, 2020 000…

A: Bonds: Bonds are debt instruments issued by the borrower company to its lenders. Bonds are issued at…

Q: On December 31, 2020, Alberta Inc. purchased $500,000, 10% bonds issued by Banff Ltd. The bonds have…

A: Bond should be valued at at current market price. If market price is changes after bond issued then…

Q: Recording Entries for HTM Debt Securities— Effective Interest Method On July 1, 2020, West…

A: HTM Securities: When investments are made in securities with an intent to held until the maturity,…

Q: On January 1, 2020, the Widner Company acquired 12% bonds with a face value of $350,000 and…

A: Bonds refer to the financial instrument issued in the market by the company for the cash borrowed.…

Q: In 2019, Osgood Corporation purchased $8.5 million worth of 10-year municipal bonds at face value.…

A: Loss on investment is the difference in fair value of the investment from the value it was…

Q: On January 1, 2019, Apollo Corporation purchased 4-year P8,000,000, 10% bonds at face value. The…

A: The bond was sold on 31 December 2021, which means it had a one year remaining life before maturity.…

Q: On January 1, 2020, Metlock Company acquires $110,000 of Spiderman Products, Inc., 9% bonds at a…

A: The question is based on the concept of Financial Accounting.

Q: Metlock Corporation has the following trading portfolio of debt investments as Security Cost A…

A: A journal entry is a basic accounting record that is used to chronologically track financial…

Q: Recording Entries for AFS Debt Securities- Effective Interest Method Adjust FVA at Sale and Year-End…

A: Journal entry: It is prepared to record the financial and non financial transaction of the business…

Q: Determine the amounts that Azur Inc. would report in relation to each of its investments on its…

A: When a company purchases a bond, the accounting treatment depends on the purpose for which the bond…

Q: In 2021 and 2022, Norman Company had the following transactions related to investments in bonds.2021…

A: Adjusting entries are journal entries made at the end of an accounting period to update accounts for…

Q: e. On the basis of the schedule above, prepare the journal entry or entries to record the bond…

A: Please find the required journal entries based on the amortization table provided in the question in…

Q: The Bradford Company issued 10% bonds, dated January 1, with a face amount of $94 million on January…

A: 1. Given, Face amount = $94000000 n = 10 x 2 = 20 i = 10%/2 = 5% Market yield = 12%/2 = 6% Cash…

Q: December 31, 2020, Alberta Inc. purchased $500,000, 10% bonds issued by Banff Ltd. The bonds have a…

A: Bold should be valued at at current market price. If market price is changes after bond issued then…

Question

On January 1, 2019, Ola Company paid $388,900 for a $400,000 face value 3% corporate bond yielding 4%, interest paid annually on December 31, and classified it as held-to-maturity. Ola's reporting year ends December 31.
On its 2020 balance sheet, Ola reports the investment at:
Select one:
O A. $396,154
B. $398,231
C. $397,296
4
D. $395,981

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Yellow Company recived issue 12% bonds with face amount of P6,000,000 maturing January 1, 2030. Interest is payable annually on December 31. The bonds are callable at 102 plus accrued interest. On January 1, 2020, the entity issued the bonds for P6,737,000 with an effective yield of 10%. The fiscal year of the entity ends December 31. The effective interest amortization is used. 1. Prepare journal entries relating to the bonds payable for 2020 2. Present the bonds payable on December 31, 2020
i
On February 18, 2021, Union Corporation purchased 1,311 IBM bonds as a long-term investment at their face value for a total of $1,311,000. Union will hold the bonds indefinitely, and may sell them if their price increases sufficiently. On December 31, 2021, and December 31, 2022, the market value of the bonds was $1,273,000 and $1,330,000, respectively. Required: 2. & 3. Prepare the adjusting entry for December 31, 2021 and 2022. (If no entry is required for a
Monkey Mortgage Inc. engaged in the following non-strategic investment transactions during 2023, all with intent to hold to maturity: 2023 Jan. 1 Purchased for $414, 441 a 9.5%, $408,000 Jaguar Corp. bond that matures in five years when the market interest rate was 9.1%. There was a $$60 transaction fee included in the above - noted payment amount. Interest is paid semiannually beginning June 30, 2023. Monkey Mortgage Inc. plans to hold this investment until maturity. Mar. 1 Bought 6, 700 shares of Mule Corp., paying $33.20 per share. There was a $60 transaction fee included in the above-noted payment amount. May 7 Received dividends of $1.60 per share on the Mule Corp. shares. June 1 Paid $323,000 for 21,350 shares of Zebra common shares. There was a $$60 transaction fee included in the above-noted payment. June 30 Received interest on the Jaguar bond. Aug. 1 Sold the Mule Corp. shares for $33.45 per share. Dec. 31 Received interest on the Jaguar bond. Dec. 31 The fair value of the…
JR Company showed the following balances in connection with its noncurrent liabilities on December 31, 2020. Bonds payable – 10%, maturing December 31, 2025 P10,000,000 Bonds payable – 12%, maturing December 31, 2030 8,000,000 Discount on bonds payable 800,000 Premium on bonds payable 500,000 Bond issue costs 200,000 The discount is related to the 10% bonds payable and the premium and bond issue costs are applicable to the 12% bonds payable. No bonds were retired during 2020. How much interest expense on the bonds payable should JR report in its 2020 income statement? (Use straight line amortization method)
On March 1, 2024, Baddour, Incorporated, issued 10% bonds, dated January 1, with a face amount of $160 million. • The bonds were priced at $143.50 million (plus accrued interest) to yield 12%. • The price if issued on January 1 would have been $140.75 million. • Interest is paid semiannually on June 30 and December 31. Baddour's fiscal year ends September 30. Required: 1. to 3. What would be the amount(s) related to the bonds Baddour would report in its balance sheet, income statement and statement of cash flows for the year ended September 30, 2024? Note: Enter your answers in whole dollars. Negative amounts should be indicated by a minus sign. Balance sheet: Bonds payable (net) Interest payable Income statement: Interest expense Statement of cash flows:
Randy Mining Co. is expanding its operations in northern Ontario. On December 21, 2018, thecompany issued $570,000 of 5%, seven-year bonds for $538,181. Interest is paid annually onDecember 31. The market rate of interest is 6%. The company uses the effective interest ratemethod. Required:Prepare the journal entries for December 31, 2019 and 2020.
On 1/1/23, Jeckle Technologies Inc. paid $4, 792, 085 to acquire $5,000,000 in bonds that mature in 5 years. The bonds pay interest semi - annually at 6% per annum on 6/30 and 12/31. The fair value of the bonds at 12/31/23 was $4, 930, 392. Required: • Prepare the 2023 journal entries if the investment is classified as (i) HTM or (ii) AFS. • Assume Jeckle sold the bond investment on 7/1/24 for $4,890,000. Prepare the required journal entries assuming the bond is classified as (i) HTM or (ii) AFS.
On January 1, 2019, Alpha Inc purchased $500,000, 9% bonds issued by Beta Corp. The bonds have a maturity date of December 31, 2024. The market interest rate on January 1, 2019 was 10%. If Alpha Inc accounts for this investment under the FVOCI model, what is the amount at which the Investment in Beta Corp. Bonds will be reported on the statement of financial position at December 31, 2021, given that the current market interest rate is 9.5%? $490,401 $481,046 $487,566 $493,728
Stave Company invests $10,000,000 in 5% fixed rate corporate bonds on January 1, 2020. All the bonds are classified as available-for-sale and are purchased at par. At year-end, market interest rates have declined, and the fair value of the bonds is now $10,600,000. Interest is paid on January 1. Prepare journal entries for Stave Company to (a) record the transactions related to these bonds in 2020, assuming Stave does not elect the fair option; and (b) record the transactions related to these bonds in 2020, assuming that Stave Company elects the fair value option to account for these bonds.
On March 1, 2024, Baddour, Incorporated, issued 10% bonds, dated January 1, with a face amount of $160 million. • The bonds were priced at $143.50 million (plus accrued Interest) to yield 12%. • The price if Issued on January 1 would have been $140.75 million. Interest is paid semiannually on June 30 and December 31. • Baddour's fiscal year ends September 30. Required: 1. to 3. What would be the amount(s) related to the bonds Baddour would report in its balance sheet, Income statement and statement of cash flows for the year ended September 30, 2024? Note: Enter your answers in whole dollars. Negative amounts should be indicated by a minus sign. Balance sheet: Bonds payable (net) Cash Income statement: Interest expense Statement of cash flows: Financing activities Operating activities
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 journal entries necessary to record the purchase of the bonds and the first two semi-annual interest receipts using the straight-line method of amortization.