On January 1, 2020, Oriole Company purchased 6% bonds, having a maturity value of $620,000 for $535,740. The bonds provide the bondholders with a 8% yield. They are dated January 1, 2020, and mature January 1, 2027, with interest paid on June 30 and December 31 of each year. Oriole 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 $537,000 2023 $557,000 2021 $532,000 2024 $577,000 2022 $527,000 (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, eg. 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 O for the amounts.) No. Date Account Titles and Explanation Debit Credi (a) (b) > >
On January 1, 2020, Oriole Company purchased 6% bonds, having a maturity value of $620,000 for $535,740. The bonds provide the bondholders with a 8% yield. They are dated January 1, 2020, and mature January 1, 2027, with interest paid on June 30 and December 31 of each year. Oriole 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 $537,000 2023 $557,000 2021 $532,000 2024 $577,000 2022 $527,000 (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, eg. 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 O for the amounts.) No. Date Account Titles and Explanation Debit Credi (a) (b) > >
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:On January 1, 2020, Oriole Company purchased 6% bonds, having a maturity value of $620,000 for $535,740. The bonds provide the
bondholders with a 8% yield. They are dated January 1, 2020, and mature January 1, 2027, with interest paid on June 30 and
December 31 of each year. Oriole 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
$537,000
2023
$557,000
2021
$532,000
2024
$577,000
2022
$527,000
(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, eg. 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 O for the amounts.)
No.
Date
Account Titles and Explanation
Debit
Credi
(a)
(b)
(To record interest received)
(To record fair value adjustment)
(c)
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