On January 1, 2025, Blossom Company purchased 5% bonds, having a maturity value of $400,000 for $343,150. The bonds provide the bondholders with a 7% yield. They are dated January 1, 2025, and mature January 1, 2035, with interest receivable June 30 and December 31 of each year. Blossom Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified as available-for-sale. The fair value of the bonds at December 31 of each year-end is as follows. 2025 $344,000 2028 $364,000 2026 339,000 2029 384,000 2027 334,000 (a) Prepare the journal entry at the date of the band purchase. (b) Prepare the journal entries to record the interest received and recognition of fair value for 2025. (c) Prepare the journal entry to record the recognition of fair value for 2026. (Round answers to O decimal places, eg. 2.525. 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 O for the amounts. List all debit entries before credit entries) No. Date Account Titles and Explanation Debit (a) (b) (To record interest received) (c) (To record fair value adjustment) ПО ПО 금든

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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(c)
On January 1, 2025, Blossom Company purchased 5% bonds, having a maturity value of $400,000 for $343,150. The bonds provide
the bondholders with a 7% yield. They are dated January 1, 2025, and mature January 1, 2035, with interest receivable June 30 and
December 31 of each year. Blossom Company uses the effective-interest method to allocate unamortized discount or premium. The
bonds are classified as available-for-sale. The fair value of the bonds at December 31 of each year-end is as follows.
2025 $344,000 2028
$364,000
2026
339,000
2029
384,000
2027
334,000
(a) Prepare the journal entry at the date of the bond purchase.
(9)
(c)
Prepare the journal entries to record the interest received and recognition of fair value for 2025.
Prepare the journal entry to record the recognition of fair value for 2026.
(Round answers to O decimal places, eg. 2.525. 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 O for the amounts. List all debit entries before credit entries.)
No.
Account Titles and Explanation
Debit
Date
(a)
(b)
(To record interest received)
(To record fair value adjustment)
ПП
Transcribed Image Text:(c) On January 1, 2025, Blossom Company purchased 5% bonds, having a maturity value of $400,000 for $343,150. The bonds provide the bondholders with a 7% yield. They are dated January 1, 2025, and mature January 1, 2035, with interest receivable June 30 and December 31 of each year. Blossom Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified as available-for-sale. The fair value of the bonds at December 31 of each year-end is as follows. 2025 $344,000 2028 $364,000 2026 339,000 2029 384,000 2027 334,000 (a) Prepare the journal entry at the date of the bond purchase. (9) (c) Prepare the journal entries to record the interest received and recognition of fair value for 2025. Prepare the journal entry to record the recognition of fair value for 2026. (Round answers to O decimal places, eg. 2.525. 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 O for the amounts. List all debit entries before credit entries.) No. Account Titles and Explanation Debit Date (a) (b) (To record interest received) (To record fair value adjustment) ПП
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