On January 1, 2024, Ithaca Corporation purchases Cortland Incorporated bonds that have a face value of $210,000. The Cortland bonds have a stated interest rate of 10%. Interest is paid semiannually on June 30 and December 31, and the bonds mature in 10 years. For bonds of similar risk and maturity, the market yield on particular dates is as follows:Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)January 1, 202411.0%June 30, 202412.0%December 31, 202414.0% No12Prepare all appropriate journal entries related to the bond investment during 2024, assuming Ithaca accounts for the bondsas a held-to-maturity investment. Ithaca calculates interest revenue at the effective interest rate as of the date it purchasedthe bonds.Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not roundyour intermediate calculations and round your final answers to nearest whole number.3Req 1A45Req 1BDateJanuary 01, 2024 | Investment in bondsJune 30, 2024Req 2June 30, 2024CashInvestment in bondsInterest revenueDiscount on bond investmentCashDecember 31, 202 CashReq 3Gain on investment (NI)Investment in bondsGeneral JournalInvestment in bonds.Interest revenueDecember 31, 202 No journal entry requiredNo journal entry required✓XX> >Debit210,000✔10,500✔360✔11,244 X10,500✔380✔0xCredit12,548 ✓197,452✔10.680 x11,244 X10,880✔0xShow less

Bond is a debt security which is purchased to earn a fixed amount of interest during the holding…

Answered: On January 1, 2024, Ithaca Corporation…

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

On January 1, 2024, Ithaca Corporation purchases Cortland Incorporated bonds that have a face value of $210,000. The Cortland bonds have a stated interest rate of 10%. Interest is paid semiannually on June 30 and December 31, and the bonds mature in 10 years. For bonds of similar risk and maturity, the market yield on particular dates is as follows:

Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)

January 1, 2024	11.0%
June 30, 2024	12.0%
December 31, 2024	14.0%

No
1
2
Prepare all appropriate journal entries related to the bond investment during 2024, assuming Ithaca accounts for the bonds
as a held-to-maturity investment. Ithaca calculates interest revenue at the effective interest rate as of the date it purchased
the bonds.
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round
your intermediate calculations and round your final answers to nearest whole number.
3
Req 1A
4
5
Req 1B
Date
January 01, 2024 | Investment in bonds
June 30, 2024
Req 2
June 30, 2024
Cash
Investment in bonds
Interest revenue
Discount on bond investment
Cash
December 31, 202 Cash
Req 3
Gain on investment (NI)
Investment in bonds
General Journal
Investment in bonds.
Interest revenue
December 31, 202 No journal entry required
No journal entry required
✓
X
X
> >
Debit
210,000✔
10,500✔
360✔
11,244 X
10,500✔
380✔
0x
Credit
12,548 ✓
197,452✔
10.680 x
11,244 X
10,880✔
0x
Show less

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