On January 1, 2020, Crane Corp. sold at 106, 100 of its $1,000 face value, five-year, 7% non-convertible, retractable bonds. The retraction feature allows the holder to redeem the bonds at an amount equal to three times net income, to a maximum of $1,157 per bond. Crane has net income of $268, $363, and $447 for the fiscal years ended December 31, 2020, 2021, and 2022, respectively. Crane Corp. prepares its financial statements in accordance with ASPE. Prepare the entry to record the issuance of the bonds. (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.) Account Titles and Explanation Debit Credit Using straight-line amortization, how much would the bonds be carried at on the statement of financial position for the 2020, 2021, and 2022 year ends? 2020 2021 2022 Amount of bond $

On January 1, 2020, Crane Corp. sold at 106, 100 of its $1,000 face value, five-year, 7% non-convertible, retractable bonds. The retraction feature allows the holder to redeem the bonds at an amount equal to three times net income, to a maximum of $1,157 per bond. Crane has net income of $268, $363, and $447 for the fiscal years ended December 31, 2020, 2021, and 2022, respectively. Crane Corp. prepares its financial statements in accordance with ASPE. Prepare the entry to record the issuance of the bonds. (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.) Account Titles and Explanation Debit Credit Using straight-line amortization, how much would the bonds be carried at on the statement of financial position for the 2020, 2021, and 2022 year ends? 2020 2021 2022 Amount of bond $

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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On July 1, 2020, West Company purchased for cash, ten $10,000 bonds of North Corporation at a market rate of 6%. The bonds pay 5% interest, payable on a semiannual basis each July 1 and January 1, and mature on July 1, 2023. The bonds are classified as trading securities. The annual reporting period ends December 31. Assume the effective interest method of amortization of any discounts or premiums. Ignore income taxes. a. Prepare a bond amortization schedule for the life of the bonds using the effective interest method. Note: Round each amount entered into the schedule to the nearest whole dollar. Use the rounded amount for later calculations in the schedule. Adjust market interest in the final year of the bond term for any net rounding difference.
Metlock Incorporated issued $0.81 million of 7.5%, 10-year bonds on July 1, 2019, at face value. Interest is payable each December 31. The company has chosen to apply the fair value option in accounting for the bonds. A risk assessment at December 31, 2020, shows that Metlock’s credit risk has increased, and as a result of the increased credit risk, the fair value of the bonds is $729,000 on that date. a. Prepare the company’s journal entries on December 31, 2020, if Metlock follows ASPE. b. Prepare the company’s journal entries on December 31, 2020, if Metlock follows IFRS 9
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On January 1, 2020, Splish Company purchased $300,000, 6% bonds of Cabana Co. for $313,128. The bonds were purchased to yield 5% interest. Interest is payable semiannually on July 1 and January 1. The bonds mature on January 1, 2025. Splish Company uses the effective-interest method to amortize discount or premium. On January 1, 2022, Splish Company sold the bonds for $305,400 after receiving interest to meet its liquidity needs. (a) Prepare the journal entry to record the purchase of bonds on January 1. Assume that the bonds are classified as available-for-sale. (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 O for the amounts.) Date Account Titles and Explanation Debit Credit Jan. 1, 2020
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Flounder Corp. purchased $276,000 of five-year, 7% Hydrocor bonds at 99 on June 30, 2024. Flounder Corp. purchased the bonds to earn interest. Interest is paid semi-annually each June 30 and December 31. The semi-annual amortization amount for the first interest period is $234 determined using the effective-interest method. At December 31, 2024, the bonds were trading at 98. Prepare the required journal entries on June 30 and December 31, 2024. (Record entries in the order displayed in the problem statement. 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 O for the amounts. List all debit entries before credit entries.) Date Account Titles (To record receipt of interest.) > (To record fair value adjustment.) Debit Credit