On January 1, 2025, Vaughn Company purchased 12% bonds having a maturity value of $320,000 for $344,260.74. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2025, and mature January 1, 2030, with interest received January 1 of each year. Vaughn Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified as available-for-sale category. The fair value of the bonds at December 31 of each year-end is as follows. 2025 $342,000 2028 $330,700 2026 $329,700 2029 $320,000 2027 $328,700 (a) Prepare the journal entry at the date of the bond purchase. (b) Prepare the journal entries to record the interest revenue and recognition of fair value for 2025. (c) Prepare the journal entry to record the recognition of fair value for 2026.

On January 1, 2025, Vaughn Company purchased 12% bonds having a maturity value of $320,000 for $344,260.74. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2025, and mature January 1, 2030, with interest received January 1 of each year. Vaughn Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified as available-for-sale category. The fair value of the bonds at December 31 of each year-end is as follows. 2025 $342,000 2028 $330,700 2026 $329,700 2029 $320,000 2027 $328,700 (a) Prepare the journal entry at the date of the bond purchase. (b) Prepare the journal entries to record the interest revenue and recognition of fair value for 2025. (c) Prepare the journal entry to record the recognition of fair value for 2026.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

On January 1, 2020, Swifty Company sold 12% bonds having a maturity value of $450.000 for $484,117. which provides the bondholders with a 10% yield. The bonds are dated January 1,2020, and mature January 1.2025, with interest payable December 31 of each year. Swifty Company allocates interest and unamortized discount or premium on the effective-interest basis, (a) Your answer is correct. Prepare the journal entry at the date of the bond issuance. (Round answer to O decimal places, eg 38,548. If no entry is required, select "No Entry for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually) Date Account Titles and Explanation Debit Credit January 1. 2020 Cash 484117 Bonds Payable 450000 Premium on Bonds Payable 34117 Attempts. 2 of3 used (b) Prepare a schedule of interest expense and bond amortization for 2020-2022. Round answer to O decimal places, e 3854) Schedule of Interest Expense and Bond…
2. On January 1, 2020, Novotna Company purchased $1,000,000, 6% bonds of Aguirre Co. for $947,574. The bonds were purchased to yield 8% interest. Interest is payable semiannually on July 1 and January 1. The bonds mature on January 1, 2023. Novotna Company uses the effective-interest method to amortize discount or premium. Assume the bond is classified as available for sale. The fair value of Aguirre bonds is $960,686 on December 31, 2020 and $975,122 on December 31, 2021. Prepare the necessary adjusting entry on December 31, 2021
On January 1, 2020, Coronado Company purchased 13% bonds, having a maturity value of $279,000 for $299,622.84. The bonds provide the bondholders with a 11% yield. They are dated January 1, 2020, and mature January 1, 2025, with interest received on January 1 of each year. Coronado Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified as available-for-sale category. The fair value of the bonds at December 31 of each year-end is as follows. 2020 $297,600 2023 $289,600 2021 $288,500 2024 $279,000 2022 $287,600 (a) Prepare the journal entry at the date of the bond purchase. (b) Prepare the journal entries to record the interest revenue and recognition of fair value for 2020. (c) Prepare the journal entry to record the recognition of fair value for 2021. (Round answers to 2 decimal places, e.g. 2,525.25. Credit account titles are automatically indented when amount is…
On January 1, 2020, Ayayai Limited purchased a 10% bond with a maturity value of $350,000. The bonds provide the bondholders with a 9% yield. They are dated January 1, 2020, and mature on January 1, 2025, with interest receivable on June 30 and December 31 of each year. Ayayai accounts for the bonds using the amortized cost approach, applies ASPE using the effective interest method, and has a December 31 year end.Prepare a bond amortization schedule. Paragraph BIU 曲 ... Record Audio Record Video Add a File
On January 1, 2020, Wildhorse Company purchased 6% bonds, having a maturity value of $550,000 for $475,253. The bonds provide the bondholders with a 8% yield. They are dated January 1, 2020, and mature January 1, 2027, with interest paid on June 30 and December 31 of each year. Wildhorse Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified as available-for-sale category. The fair value of the bonds at December 31 of each year-end is as follows. 2020 $476,000 2023 2021 $471,000 2024 $466,000 2022 (a) Prepare the journal entry at the date of the bond purchase. (b) Prepare the journal entries to record the interest revenue and recognition of fair value for 2020. (c) Prepare the journal entry to record the recognition of fair value for 2021. (Round answers to 2 decimal places, eg. 2,525.25. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry for…
On January 1, 2020, National Retail purchased $100,000 of GEH Company bonds at a discount of $10,000. The GEH bonds pay 6% interest but were purchased when the market interest rate was 8% for bonds of similar risk and maturity. The bonds pay interest semiannually on June 30 and December 31 of each year. National Retail accounts for the bonds as a held-to-maturity investment and uses the effective interest method. In National Retail's December 31, 2020, journal entry to record the second period of interest would include a credit to interest revenue of: $3,000 $3,600 $3,336 d. $7,336 e. $3,624 a. b. C.
On January 1, 2025, Crane Company purchased 6% bonds, having a maturity value of $530,000 for $457,971. The bonds provide the bondholders with a 8% yield. They are dated January 1, 2025, and mature January 1, 2035, with interest receivable June 30 and December 31 of each year. Crane 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) No. (a) $459,297 454,297 2029 (b) 449,297 (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.) Date 2028 Prepare the journal entry at the date of the bond purchase. Prepare the journal entries to record the interest received and recognition…
On January 1, 2020, Cullumber Company purchased 6% bonds, having a maturity value of $600,000 for $518,458. The bonds provide the bondholders with a 8% yield. They are dated January 1, 2020, and mature January 1, 2027, with interest paid on 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 category. The fair value of the bonds at December 31 of each year-end is as follows. 2020 $519,000 2023 $539,000 $514,000 2024 $559,000 $509,000 2021 2022 (a) (b) (c) Prepare the journal entry at the date of the bond purchase. Prepare the journal entries to record the interest revenue and recognition of fair value for 2020. Prepare the journal entry to record the recognition of fair value for 2021.
On January 1, 2020, Cheyenne Company purchased 5% bonds, having a maturity value of $570,000 for $488,989. The bonds provide the bondholders with a 7% yield. They are dated January 1, 2020, and mature January 1, 2027, with interest paid on June 30 and December 31 of each year. Cheyenne Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified as available-for-sale category. The fair value of the bonds at December 31 of each year-end is as follows. 2020 $490,000 2023 $510,000 2021 $485,000 2024 $530,000 2022 $480,000 (a) Prepare the journal entry at the date of the bond purchase. (b) Prepare the journal entries to record the interest revenue and recognition of fair value for 2020. (c) Prepare the journal entry to record the recognition of fair value for 2021. (Round answers to 2 decimal places, e.g. 2,525.25. Credit account titles are automatically indented…
Riverbed Company issued $2,690,000, 9%, 20-year bonds on January 1, 2020, at 105. Interest is payable annually on January 1. Riverbed uses straight-line amortization for bond premium or discount. Prepare the journal entries to record the following events. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) (a) The issuance of the bonds. (b) The accrual of interest and the premium amortization on December 31, 2020. (c) The payment of interest on January 1, 2021. (d) The redemption of the bonds at maturity, assuming interest for the last interest period has been paid and recorded. Date Account Titles and Explanation Debit Credit > >
Subject: accounting
On January 1, 2025, Flounder Company purchased 11% bonds having a maturity value of $312,000 for $336,270.95. The bonds provide the bondholders with a 9% yield. They are dated January 1, 2025, and mature January 1, 2030, with interest received on January 1 of each year. Flounder Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified as available-for-sale category. The fair value of the bonds at December 31 of each year-end is as follows. 2025 $333,900 2028 $320,900 2029 2026 2027 $320,000 $321,800 $312,000 (a) Prepare the journal entry at the date of the bond purchase. (b) Prepare the journal entries to record the interest revenue and recognition of fair value for 2025. (c) Prepare the journal entry to record the recognition of fair value for 2026. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No…