On January 1, 2024. Ithaca Corporation purchases Cortland Incorporated bonds that have a face value of $300,000. The Cortland bonds have a stated interest rate of 7%. Interest is paid semiannually on June 30 and December 31 , and the bonds mature in 10 years. For bonds of similar risk and maturity, the market yield on particular dates is as follows: Note: Use tables, Excel, or a financial calculator. (EV of \$1. PV of \$1, EVA of \$1, PVA of \$1. FVAD of \$1 and PVAD of \$1) January 1, 2023 8.0% June 30, 202 9.0% December 31, 2024 10.0% Required: 1-a. Calculate the price lthaca would have paid for the Cortand bonds on January 1, 2024 (ignoring brokerage fees). and prepare a journal entry to record the purchase. 2. Prepare all appropriate journal entries related to the bond investment during 2021 assuming Ithaca accounts for the bonds as a held-to maturity investment. Ithaca calculates interest revenue at the effective interest rate as of the date it purchased the bonds. 3. Prepare all appropriate journal entries related to the bond investment during 2021 assuming that Ithaca chose the fair value option when the bonds were purchased and that Ithaca determines fair value of the bonds semiannually. Ithaca calculates interest revenue at the effective interest rate as of the date it purchased the bonds.
On January 1, 2024. Ithaca Corporation purchases Cortland Incorporated bonds that have a face value of $300,000. The Cortland bonds have a stated interest rate of 7%. Interest is paid semiannually on June 30 and December 31 , and the bonds mature in 10 years. For bonds of similar risk and maturity, the market yield on particular dates is as follows: Note: Use tables, Excel, or a financial calculator. (EV of \$1. PV of \$1, EVA of \$1, PVA of \$1. FVAD of \$1 and PVAD of \$1) January 1, 2023 8.0% June 30, 202 9.0% December 31, 2024 10.0% Required: 1-a. Calculate the price lthaca would have paid for the Cortand bonds on January 1, 2024 (ignoring brokerage fees). and prepare a
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