On January 1, 2025, Copa Company purchased $300,000, 6% bonds of Cabana Co. for $313,128. The bonds were purchased to yield 5% interest. Interest is payable semiannually on July 1 and January 1. The bonds mature on January 1, 2030. Copa Company uses the effective-interest method to amortize discount or premium. On January 1, 2027, Copa Company sold the bonds for $305,600 after receiving interest to meet its liquidity needs. (a) Prepare the journal entry to record the purchase of bonds on January 1. Assume that the bonds are classified as available-for-sale. (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 debit entry before credit entry.) Date Jan. 1, 2025 Account Titles and Explanation Debit Credit

On January 1, 2025, Copa Company purchased $300,000, 6% bonds of Cabana Co. for $313,128. The bonds were purchased to yield 5% interest. Interest is payable semiannually on July 1 and January 1. The bonds mature on January 1, 2030. Copa Company uses the effective-interest method to amortize discount or premium. On January 1, 2027, Copa Company sold the bonds for $305,600 after receiving interest to meet its liquidity needs. (a) Prepare the journal entry to record the purchase of bonds on January 1. Assume that the bonds are classified as available-for-sale. (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 debit entry before credit entry.) Date Jan. 1, 2025 Account Titles and Explanation Debit Credit

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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An investor company purchased $491,000 of 8% bonds from the investee company on January 1, 2020, with interest payable on December 31. The bonds were classified as Available-for-Sale. The bonds sold for $755,470. Using the effective-interest method, the investor company revised the Available-for-Sale Debt Securities account on December 31, 2020 by the amortized discount/premium of $6,910. At December 31, 2020, the fair value of the investee company bonds was $928,000. What is the amount of unrealized holding gain/loss related to this investment in 2020? (Very important: Just enter the amount. DO NOT put a plus or minus sign in front of the amount.)
On January 1, 2008, Davis Corporation issued $3,000,000 of 8% bonds at 103. Interest is paid annually on December 31 of each year. The bonds mature on December 31, 2027, and the company uses the straight-line method of amortization. On January 2, 2019, Davis reacquired the bonds and recognized a loss of $96,000. Required: Next Level Calculate the reacquisition price of the bonds on January 2, 2019, and prepare the journal entry to record the reacquisition of Davis’s bonds.
On May 1, 2018, ABC Corporation purchased $1,500,000 of 12% bonds, interest payable on January 1 and July 1, for $1,406,500 plus accrued interest. The bonds mature on January 1, 2024. Amortization is recorded when interest is received by the straight-line method (by months and round to the nearest dollar). (Assume bonds are available for sale.) The bonds are sold on November 1, 2019 for $1,412,500 plus accrued interest. Prepare all entries required to properly record the sale.
On January 1, 2023, Pronghorn Limited pays $105,753 to purchase $110,000 of Chan Corporation 9% bonds. The market rate of interest at the time was 10%. Pronghorn accounts for this investment at amortized cost using the effective interest method. The bonds mature on January 1, 2028, and interest is payable each July 1 and January 1. Note that the bond is acquired on an interest payment date and there is therefore no accrued interest for Pronghorn to pay on January 1. Pronghorn has an August 31 year end (a) * Your answer is incorrect. Calculate the amortization of the discount per month using the straight-line method. (Round answer to 2 decimal places, eg 125.55) SUPPOR
On July 1, 2020, West Company purchased for cash, three $10,000 bonds of North Corporation at a market rate of 4%. The bonds pay 5% interest, payable on a semiannual basis each July 1 and January 1, and mature on July 1, 2023. The bonds are classified as trading securities. The annual reporting period ends December 31. Assume the effective interest method of amortization of any discounts or premiums. Ignore income taxes. d. Record the receipt of interest on January 1, 2021. e. Record the sale of all of the bonds on January 2, 2021, for $33,200. f. Record the adjustment to the Fair Value Adjustment account on December 31, 2021, assuming no additional TS investments. Note: List multiple debits or credits (when applicable) in alphabetical order. Note: Round each amount to the nearest whole dollar. Note: If a journal entry isn't required for the transaction, select "N/A" as the account names and leave the Dr. and Cr. answers blank (zero).
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An investor company purchased $427,000 of 8% bonds from the investee company on January 1, 2020, with interest payable on December 31. The bonds were classified as Available-for-Sale. The bonds sold for $706,390. Using the effective-interest method, the investor company revised the Available-for-Sale Debt Securities account on December 31, 2020 and December 31, 2021 by the amortized discount/premium of $6,470. and $8,200, respectively. At December 31, 2020, the fair value of the investee company bonds was $912,000. At December 31, 2021, the fair value of the investee company bonds was $843,000. What is the amount of unrealized holding gain/loss related to this investment in 2021? (Very important: Just enter the amount. DO NOT put a plus or minus sign in front of the amount.)
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On January 1, 2023, Liu Corporation paid $242,952 to acquire bonds of Singh Investment Corp with a par value of $241,000. The annual contract rate on the bonds is 6.5% and interest is paid semiannually on June 30 and December 31. The bonds mature after three years. The market rate of Interest was 6.2%. Liu Corporation intends to hold the bonds until maturity. Required: 1. Prepare an amortization schedule for the investment showing only 2023. (Do not round intermediate calculations. Round your answers to the nearest whole dollar amount. Enter all the amounts as positive values.) Cash Period Interest Period Ending Premium Amort. Interest Received Income Unamortized Premium Carrying Value Jan. 1/23 June 30/23 Dec. 31/23
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On July 1, 2020, West Company purchased for cash, four $10,000 bonds of North Corporation at a market rate of 4%. The bonds pay 5% interest, payable on a semiannual basis each July 1 and January 1, and mature on July 1, 2023. The bonds are classified as trading securities. The annual reporting period ends December 31. Assume the effective interest method of amortization of any discounts or premiums. Ignore income taxes. Amortization Schedule a. Prepare a bond amortization schedule for the life of the bonds using the effective interest method. Note: Round each amount entered into the schedule to the nearest whole dollar. Use the rounded amount for later calculations in the schedule. Adjust market interest in the final year of the bond term for any net rounding difference. Date StatedInterest MarketInterest PremiumAmortization BondAmortized Cost Jul. 1, 2020 Answer Jan. 1, 2021 Answer Answer Answer Answer Jul. 1, 2021 Answer Answer Answer Answer Jan. 1, 2022…