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On October 1, Novak Ltd. purchased 9% bonds with a face value of $1,000 for trading purposes, accounting for the investment at FV- NI. The bonds were priced at 1.023 to yield Novak 6% and pay interest annually each October 1. Novak has a December 31 year end, and at this date, the bonds' fair value was $1,055. Assume Novak applies IFRS.

On October 1, Novak Ltd. purchased 9% bonds with a face value of $1,000 for trading purposes, accounting for the investment at FV- NI. The bonds were priced at 1.023 to yield Novak 6% and pay interest annually each October 1. Novak has a December 31 year end, and at this date, the bonds' fair value was $1,055. Assume Novak applies IFRS.

FINANCIAL ACCOUNTING
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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9, please answer part c, thanks

Prepare Novak's journal entry for the year-end fair value adjustment. (Round answers to 2 decimal places, e.g. 52.75. 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.) Account Titles and Explanation Debit Credit
Transcribed Image Text:Prepare Novak's journal entry for the year-end fair value adjustment. (Round answers to 2 decimal places, e.g. 52.75. 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.) Account Titles and Explanation Debit Credit
On October 1, Novak Ltd. purchased 9% bonds with a face value of $1,000 for trading purposes, accounting for the investment at FV- NI. The bonds were priced at 1.023 to yield Novak 6% and pay interest annually each October 1. Novak has a December 31 year end, and at this date, the bonds' fair value was $1,055. Assume Novak applies IFRS. (a) Your Answer Prepare Novak's journal entry for the purchase of the investment. (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.) Correct Answer (Used) Account Titles and Explanation (b) FV-NI Investments Cash Your Answer Correct Answer (Used) Account Titles and Explanation Interest Receivable Debit Investment Income or Loss Prepare Novak's journal entry for the December 31 interest accrual. (Round answers to 2 decimal places, e.g. 52.75. 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.) 1,023 Debit Credit 22.50 1,023 Credit 22.50
Transcribed Image Text:On October 1, Novak Ltd. purchased 9% bonds with a face value of $1,000 for trading purposes, accounting for the investment at FV- NI. The bonds were priced at 1.023 to yield Novak 6% and pay interest annually each October 1. Novak has a December 31 year end, and at this date, the bonds' fair value was $1,055. Assume Novak applies IFRS. (a) Your Answer Prepare Novak's journal entry for the purchase of the investment. (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.) Correct Answer (Used) Account Titles and Explanation (b) FV-NI Investments Cash Your Answer Correct Answer (Used) Account Titles and Explanation Interest Receivable Debit Investment Income or Loss Prepare Novak's journal entry for the December 31 interest accrual. (Round answers to 2 decimal places, e.g. 52.75. 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.) 1,023 Debit Credit 22.50 1,023 Credit 22.50
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