On January 1, 2020, the Widner Company acquired 12% bonds with a face value of $350,000 and classified them as held-to-maturity. The bonds pay interest on June 30 and December 31, and mature on December 31, 2029 Required: a. Assume the bonds were acquired for $312,921 to yield 14%. Prepare an investment discount amortization schedule for the first year of the investment, using the effective interest method. Assume a 360-day year. Round all calculations to the nearest dollar. Investment Carrying Value of Interest in Debt Investment Cash Income Securities in Debt Date (Debit) (Credit) (Debit) Securities 01/01/20 06/30/20 12/31/20 b. Assume the bonds were acquired for $393,618 to yield 10%. Prepare an investment premium amortization schedule for the first year of the investment using the effective interest method. Assume a 360-day year. Round all calculations to the nearest dollar. Investment Carrying Value of Interest in Debt Investment Cash Income Securities in Debt Date (Debit) (Credit) (Credit) Securities 01/01/20 06/30/20 12/31/20

On January 1, 2020, the Widner Company acquired 12% bonds with a face value of $350,000 and classified them as held-to-maturity. The bonds pay interest on June 30 and December 31, and mature on December 31, 2029 Required: a. Assume the bonds were acquired for $312,921 to yield 14%. Prepare an investment discount amortization schedule for the first year of the investment, using the effective interest method. Assume a 360-day year. Round all calculations to the nearest dollar. Investment Carrying Value of Interest in Debt Investment Cash Income Securities in Debt Date (Debit) (Credit) (Debit) Securities 01/01/20 06/30/20 12/31/20 b. Assume the bonds were acquired for $393,618 to yield 10%. Prepare an investment premium amortization schedule for the first year of the investment using the effective interest method. Assume a 360-day year. Round all calculations to the nearest dollar. Investment Carrying Value of Interest in Debt Investment Cash Income Securities in Debt Date (Debit) (Credit) (Credit) Securities 01/01/20 06/30/20 12/31/20

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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Question

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On January 1, 2020, the Widner Company acquired 12% bonds with a face value of $350,000 and classified them as held-to-maturity. The bonds pay interest on June 30 and December 31, and mature on December 31, 2029.
Required:
a. Assume the bonds were acquired for $312,921 to yield 14%. Prepare an investment discount amortization schedule for the first year of the investment, using the effective interest method. Assume a 360-day year. Round all calculations to the nearest dollar.
Investment
Carrying Value of
Interest
in Debt
Investment
Cash
Income
Securities
in Debt
Date
(Debit)
(Credit)
(Debit)
Securities
01/01/20
06/30/20
12/31/20
b. Assume the bonds were acquired for $393,618 to yield 10%. Prepare an investment premium amortization schedule for the first year of the investment using the effective interest method. Assume a 360-day year. Round all calculations to the nearest dollar.
Investment
Carrying Value of
Interest
in Debt
Investment
Cash
Income
Securities
in Debt
Date
(Debit)
(Credit)
(Credit)
Securities
01/01/20
06/30/20 $
12/31/20

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