On January 1, 2023, Toyota Corporation purchased a newly issued $1,025,000 bond. The bond matured on December 31, 2025, and paid interest at 6% every June 30 and December 31. The market interest rate was 8%. Toyota's fiscal year-end is October 31, and the company had the intention and ability to hold the bond until its maturity date. The bond will be accounted using the amortized cost model. Click here to view Table A.2 - PRESENT VALUE OF 1 - (PRESENT VALUE OF A SINGLE SUM) Click here to view Table A.4 - PRESENT VALUE OF AN ORDINARY ANNUITY OF 1 (a) Calculate the price paid for the bond using a financial calculator or Excel functions. (Round answers to 2 decimal places, e.g. 52.75.) b) Prepare an amortization schedule for the bond. (Round answers to 2 decimal places, e.g. 52.75.) c). Prepare the journal entries on the books of Toyota Corporation for each of the following dates. (Round answers to 2 decimal places, e.g. 52.75. 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.) ● January 1, 2020 ● June 30, 2020 ● October 31, 2020 ● December 31, 2020 ● December 31, 2022 (two entries) one for interest and one for maturity of bond

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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On January 1, 2023, Toyota Corporation purchased a newly issued $1,025,000 bond. The bond matured on December 31, 2025, and paid interest at 6% every June 30 and December 31. The market interest rate was 8%. Toyota's fiscal year-end is October 31, and the company had the intention and ability to hold the bond until its maturity date. The bond will be accounted using the amortized cost model.
Click here to view Table A.2 - PRESENT VALUE OF 1 - (PRESENT VALUE OF A SINGLE SUM)
Click here to view Table A.4 - PRESENT VALUE OF AN ORDINARY ANNUITY OF 1

(a) Calculate the price paid for the bond using a financial calculator or Excel functions. (Round answers to 2 decimal places, e.g. 52.75.)

b) Prepare an amortization schedule for the bond. (Round answers to 2 decimal places, e.g. 52.75.)

c). Prepare the journal entries on the books of Toyota Corporation for each of the following dates. (Round answers to 2 decimal places, e.g. 52.75. 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.)

● January 1, 2020
● June 30, 2020
● October 31, 2020
● December 31, 2020
● December 31, 2022 (two entries) one for interest and one for maturity of bond

Prepare an amortization schedule for the bond. (Round answers to 2 decimal places, e.g. 52.75.)
Date
Jan. 1, 2020
June 30, 2020 $
Dec. 31, 2020
June 30, 2021
Dec. 31, 2021
June 30, 2022
Dec. 31, 2022
Cash
Received
LA
Interest
Revenue
GA
Discount
Amortization
Amortized Cost
(Present Value)

Date Account Titles and Explanation
#
June 30, 2020
Oct. 31, 2020
Dec. 31, 2020
Dec. 31, 2022
Dec. 31, 2022
(To record collection of interest.)
(To record maturity of bond.)
Debit
Credit

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