On January 1, 2025, Wildhorse Company purchased 6% bonds, having a maturity value of $510,000 for $440,689. 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. Wildhorse 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 $442,172 2028 $462,172 437,172 2029 432,172 482,172 (a) Prepare the journal entry at the date of the bond 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, 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, Wildhorse Company purchased 6% bonds, having a maturity value of $510,000 for $440,689. 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. Wildhorse 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 $442,172 2028 $462,172 437,172 2029 432,172 482,172 (a) Prepare the journal entry at the date of the bond 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, 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.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![On January 1, 2025, Wildhorse Company purchased 6% bonds, having a maturity value of $510,000 for $440,689. 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. Wildhorse 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)
$442,172 2028 $462,172
437,172 2029
432,172
482,172
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)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F2da59b79-efcb-4504-a5e9-dff0d8563be1%2F5e353351-73c5-476e-869f-1823bdd38fab%2F969t86o_processed.png&w=3840&q=75)
Transcribed Image Text:On January 1, 2025, Wildhorse Company purchased 6% bonds, having a maturity value of $510,000 for $440,689. 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. Wildhorse 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)
$442,172 2028 $462,172
437,172 2029
432,172
482,172
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)
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