On January 1, 2019, Roosevelt Company purchased 12% bonds having a maturity value of $600,000 for $637,907.40. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2019, and mature January 1, 2024, with interest received December 31 of each year. Assume that Roosevelt elected the fair value option for this held-for-collection investment. Instructions (a). Prepare any entries necessary at December 31, 2019, assuming the fair value of the bonds is $640,000. (b). Prepare any entries necessary at December 31, 2020, assuming the fair value of the bonds is $625,000.
On January 1, 2019, Roosevelt Company purchased 12% bonds having a maturity value of $600,000 for $637,907.40. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2019, and mature January 1, 2024, with interest received December 31 of each year. Assume that Roosevelt elected the fair value option for this held-for-collection investment. Instructions (a). Prepare any entries necessary at December 31, 2019, assuming the fair value of the bonds is $640,000. (b). Prepare any entries necessary at December 31, 2020, assuming the fair value of the bonds is $625,000.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
On January 1, 2019, Roosevelt Company purchased 12% bonds having a maturity value of $600,000 for $637,907.40. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2019, and mature January 1, 2024, with interest received December 31 of each year.
Assume that Roosevelt elected the fair value option for this held-for-collection investment.
Instructions
(a). Prepare any entries necessary at December 31, 2019, assuming the fair value of the bonds is $640,000.
(b). Prepare any entries necessary at December 31, 2020, assuming the fair value of the bonds is $625,000.
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