On January 1, 2023, Marigold Limited paid $516,391.10 for 12% bonds with a maturity value of $480,000. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2023, and mature on January 1, 2028, with interest receivable on December 31 of each year. Marigold applies ASPE using the effective interest method, and has a December 31 year end. Assume that Marigold hopes to make a gain on the bonds as interest rates are expected to fall. Marigold accounts for the bonds at fair value with changes in value taken to net income, and separately recognizes and reports interest income. The fair value of the bonds at December 31 of each year end is as follows: 2023 $512,800.00 2024 $494,400.00 2025 $492,480.00 2026 $486,720.00 2027 $480,000.00 Prepare the journal entries to record interest income and interest received and recognition of fair value at December 31, 2023, 2024, and 2025. (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. List all debit entries before credit entries. Round answers to 2 decimal places, e.g. 52.75.) Date Account Titles and Explanation (To record interest collected) (To record fair value adjustment) (To record interest collected) (To record fair value adjustment) (To record interest collected) Debit Cre
On January 1, 2023, Marigold Limited paid $516,391.10 for 12% bonds with a maturity value of $480,000. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2023, and mature on January 1, 2028, with interest receivable on December 31 of each year. Marigold applies ASPE using the effective interest method, and has a December 31 year end. Assume that Marigold hopes to make a gain on the bonds as interest rates are expected to fall. Marigold accounts for the bonds at fair value with changes in value taken to net income, and separately recognizes and reports interest income. The fair value of the bonds at December 31 of each year end is as follows: 2023 $512,800.00 2024 $494,400.00 2025 $492,480.00 2026 $486,720.00 2027 $480,000.00 Prepare the journal entries to record interest income and interest received and recognition of fair value at December 31, 2023, 2024, and 2025. (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. List all debit entries before credit entries. Round answers to 2 decimal places, e.g. 52.75.) Date Account Titles and Explanation (To record interest collected) (To record fair value adjustment) (To record interest collected) (To record fair value adjustment) (To record interest collected) Debit Cre
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter13: Investments And Long-term Receivables
Section: Chapter Questions
Problem 1RE
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Question
Prepare the
Transcribed Image Text:On January 1, 2023, Marigold Limited paid $516,391.10 for 12% bonds with a maturity value of $480,000. The bonds provide the
bondholders with a 10% yield. They are dated January 1, 2023, and mature on January 1, 2028, with interest receivable on
December 31 of each year. Marigold applies ASPE using the effective interest method, and has a December 31 year end. Assume
that Marigold hopes to make a gain on the bonds as interest rates are expected to fall. Marigold accounts for the bonds at fair value
with changes in value taken to net income, and separately recognizes and reports interest income. The fair value of the bonds at
December 31 of each year end is as follows:
2023 $512,800.00
2024
$494,400.00
2025 $492,480.00
2026 $486,720.00
2027 $480,000.00
Transcribed Image Text:Prepare the journal entries to record interest income and interest received and recognition of fair value at December 31, 2023,
2024, and 2025. (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. List all debit entries before credit entries. Round answers
to 2 decimal places, e.g. 52.75.)
Date
Account Titles and Explanation
(To record interest collected)
(To record fair value adjustment)
(To record interest collected)
(To record fair value adjustment)
(To record interest collected)
Debit
Cre
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