On January 1, 2020, Splish Company purchased 12% bonds, having a maturity value of $450,000.00, for $484,116.66. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2020, and mature January 1, 2025, with interest received January 1 of each year. Splish has an active trading strategy for these bonds. The fair value of the bonds at December 31 of each year-end is as follows. 2020 $481,010.12 2023 $464,524.47 2021 $462,524.47 2024 $450,000.00 2022 $460,524.47 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
On January 1, 2020, Splish Company purchased 12% bonds, having a maturity value of $450,000.00, for $484,116.66. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2020, and mature January 1, 2025, with interest received January 1 of each year. Splish has an active trading strategy for these bonds. The fair value of the bonds at December 31 of each year-end is as follows. 2020 $481,010.12 2023 $464,524.47 2021 $462,524.47 2024 $450,000.00 2022 $460,524.47 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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On January 1, 2020, Splish Company purchased 12% bonds, having a maturity value of $450,000.00, for $484,116.66. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2020, and mature January 1, 2025, with interest received January 1 of each year. Splish has an active trading strategy for these bonds. The fair
| 2020 | $481,010.12 | 2023 | $464,524.47 | |||
| 2021 | $462,524.47 | 2024 | $450,000.00 | |||
| 2022 | $460,524.47 |
a. Prepare the
b. Prepare the journal entries to record the interest revenue and recognition of fair value for 2020.
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