On January 1, 2025, Cullumber Company purchased 5% bonds, having a maturity value of $540,000 for $463,253. 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. Cullumber 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 2026 2027 (a) (b) (c) $464,000 2028 $484,000 459,000 2029 454,000 504,000 Prepare the journal entry at the date of the bond purchase. 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, e.g. 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.)

On January 1, 2025, Cullumber Company purchased 5% bonds, having a maturity value of $540,000 for $463,253. 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. Cullumber 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 2026 2027 (a) (b) (c) $464,000 2028 $484,000 459,000 2029 454,000 504,000 Prepare the journal entry at the date of the bond purchase. 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, e.g. 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.)

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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