On January 1, 2020, Kevin Cosme acquired a P2,000,000, 10% bond for P2,159,708. The ongoing interest rate on the date of the acquisition of the bonds was 8%.Beckham classifies the bond as financial asset at fair value through other comprehensive income The fair value of the bonds at the end of each year is listed below December 31, 2020 102 December 31, 2021 98 December 31, 2022 101
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- 2. On January 1, 2020, Novotna Company purchased $1,000,000, 6% bonds of Aguirre Co. for $947,574. The bonds were purchased to yield 8% interest. Interest is payable semiannually on July 1 and January 1. The bonds mature on January 1, 2023. Novotna Company uses the effective-interest method to amortize discount or premium. Assume the bond is classified as available for sale. The fair value of Aguirre bonds is $960,686 on December 31, 2020 and $975,122 on December 31, 2021. Prepare the necessary adjusting entry on December 31, 2021On January 1, 2026, Baker Company purchased, as an investment, 5% bonds, having a maturity value of $150,000, for $138,400. The bonds provide the bondholders with a 7% yield. They are dated January 1, 2026, and mature January 1, 2036, with interest receivable June 30 and December 31 of each year. The securities are classified as available-for-sale. January 1, 2026 June 30, 2026 December 31, 2026 June 30, 2027 December 31, 2027 June 30, 2028 December 31, 2028 Schedule of Interest Revenue and Bond Amortization Amortization Cash Received (2.5%) Interest Revenue (3.5%) 3,750 3,750 3,750 3,750 3,750 3,750 4,844 4,882 4,922 4,963 5,005 5,049 The fair value of the bonds at December 31 of each year-end is as follows. 2026 145,000 2027 148,000 2028 152,000 1,094 1,132 1,172 1,213 1,255 1,299 Carrying Value 138,400 139,494 140,626 141,798 143,011 144,266 145,565 a) Prepare the journal entry at the date of the investment purchase. b) Prepare the journal entries to record the interest received on…On January 1, 2020, Beckham acquired a 2,000,000, 5 year bond, 10% bond for 2,169,329. Transaction cost is 4,500. The ongoing interest rate on the date of the acquisition of the bonds was 7.8859%. The fair value of the bond at the end of each year are listed below: Dec 31, 2020 Dec 31, 2021 Dec 31, 2022 101 98 105
- View Policies Show Attempt History Current Attempt in Progress On January 1, 2021, Vaughn Corp. purchased $1,740,000 of 6-year, 3% bonds for $1,647,994 to yield a market interest rate of 4%. Vaughn receives interest on these bonds semi-annually on July 1 and January 1. Vaughn's year end is September 30 and it intends to hold the bonds until January 1, 2027, the date the bonds mature. The bonds' trading value was $1,678,000 on September 30, 2021. (a) Your answer is correct. Record the purchase of the bonds on January 1, 2021. (List all debit entries before credit entries. 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.) Date Account Titles and Explanation Debit Credit Jan. 1 Long-Term Investments 1,647,994 Cash 1,647,994 eTextbook and Media List of AccountsCurrent Attempt in Progress On January 2, 2018, Crane Corporation, a small company that follows ASPE, issued $1.8 million of 10% bonds at 98 due on December 31, 2027. Legal and other costs of $180,000 were incurred in connection with the issue. Crane has a policy of capitalizing and amortizing the legal and other costs incurred by including them with the bond recorded at the date of issuance. Interest on the bonds is payable each December 31. The $180,000 of issuance costs are being deferred and amortized on a straight-line basis over the 10- year term of the bonds. The discount on the bonds is also being amortized on a straight-line basis over the 10 years. (The straight-line method is not materially different in its effect compared with the effective interest method.) The bonds are callable at 102 (that is, at 102% of their face amount), and on January 2, 2023, the company called a face amount of $1,000,000 of the bonds and retired them. (a) Ignoring income taxes, calculate the…On January 1, 2020, Beckham acquired a 2,000,000, 5 year bond, 10% bond for 2,169,329. Transaction cost is 4,500. The ongoing interest rate on the date of the acquisition of the bonds was 7.8859%. The fair value of the bond at the end of each year are listed below: Dec 31, 2020 Dec 31, 2021 Dec 31, 2022 101 98 105 A. Is the bond trading at discount or premium
- On January 1, 2019, Shay Company issues $700,000 of 10%, 15-year bonds. The bonds sell for $684,250. Six years later, on January 1, 2025, Shay retires these bonds by buying them on the open market for $731,500. All interest is accounted for and paid through December 31, 2024, the day before the purchase. The straight-line method is used to amortize any bond discount. 1. What is the amount of the discount on the bonds at issuance? 2. How much amortization of the discount is recorded on the bonds for the entire period from January 1, 2019, through December 31, 2024? 3. What is the carrying (book) value of the bonds as of the close of business on December 31, 2024? 4. Prepare the journal entry to record the bond retirement.A company issues $ 25150000, 5.8%, 20-year bonds to yield 6% on January 1, 2020. Interest is paid on June 30 and December 31. The proceeds from the bonds are $ 24568662. Using effective-interest amortization, what will the carrying value of the bonds be on the December 31, 2020 balance sheet? (Round answer to 0 decimal place, e.g. 52.) $ 24599916 $ 25150000 $ 24584313 $ 24576370Flint Corporation sold $3,050,000, 6%, 5-year bonds on January 1, 2022. The bonds were dated January 1, 2022, and pay interest on January 1. Flint Corporation uses the straight-line method to amortize bond premium or discount. (a) Prepare all the necessary journal entries to record the issuance of the bonds and bond interest expense for 2022, assuming that the bonds sold at 103. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Jan. 1 Dec. 31
- 15. On Januory 1,2020, Auro Compony purchased bonds with foce voue of P5,000000 for P4,766000. the stated rate on the bonds is 10% but the bonds are aCcuired to yield 12%. The bonds mature of the rote of P1.000,000 annuoly every December 31 and the interest is payable annually also every December 31. The entity uses the effective interestmethod of omortizing disCount. Aura Compony shouid report the held to maturity bond investment on December 31,2020 at a. 4,766,000 b. 3694080 C. 4,837,920. d. 3837,92035 On January 1, 2020, Alaska Corporation purchased P1,000,000 10% bonds for P1,051,510 (including broker’s commission of P20,000). Interest is payable annually every December 31. The bonds mature on December 31, 2022. The prevailing market rate for the bonds is 9% at December 31, 2020. If the bonds are classified as FA@FVTPL, the amount to be recognized as fair value adjustment loss in its 2020 profit or loss isOn March 31, 2021, Gardner Corporation received authorization to issue $80,000 of 9 percent, 30-year bonds payable. The bonds pay interest on March 31 and September 30. The entire issue was dated March 31, 2021, but the bonds were not issued until April 30, 2021. They were issued at face value. a. Prepare the journal entry at April 30, 2021, to record the sale of the bonds. b. Prepare the journal entry at September 30, 2021, to record the semiannual bond interest payment. c. Prepare the adjusting entry at December 31, 2021, to record bond interest expense accrued since September 30, 2021. (Assume that no monthly adjusting entries to accrue interest expense had been made prior to December 31, 2021.) (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet 1 2 3 Record the sale of bonds. Note: Enter debits before credits. Date Apr 30, 2021 Record entry General Journal Clear entry Debit…