On Sep. 1, 2010 Bros Company purchased 10000 of Handle production Ins.. %9 Bonds lace value 100 $ per bond at cost of $ 967000 and paid 1000$ as commission to the dealer plus accrued interest at the purchase date in cash, the interest is payable each Jan. I and July I and the bonds mature at Jan. 1, 2016. At April 2015 the company sold 90% of bonds at 99 $ per bond plus accrued interest in cash. Instruction Prepare the entries in 2010,2011,2015

On Sep. 1, 2010 Bros Company purchased 10000 of Handle production Ins.. %9 Bonds lace value 100 $ per bond at cost of $ 967000 and paid 1000$ as commission to the dealer plus accrued interest at the purchase date in cash, the interest is payable each Jan. I and July I and the bonds mature at Jan. 1, 2016. At April 2015 the company sold 90% of bonds at 99 $ per bond plus accrued interest in cash. Instruction Prepare the entries in 2010,2011,2015

Financial Accounting

14th Edition

ISBN:9781305088436

Author:Carl Warren, Jim Reeve, Jonathan Duchac

Publisher:Carl Warren, Jim Reeve, Jonathan Duchac

Chapter15: Investments And Fair Value Accounting

Section: Chapter Questions

Problem 5E

See similar textbooks

Similar questions

Parilo Company acquired 170,000 of Makofske Co., 5% bonds on May 1, 2016, at their face amount. Interest is paid semiannually on May 1 and November 1. On November 1, 2016, Parilo Company sold 50,000 of the bonds for 96. Journalize entries to record the following: a. The initial acquisition of the bonds on May 1. b. The semiannual interest received on November 1. c. The sale of the bonds on November 1. d. The accrual of 1,000 interest on December 31, 2016.
Emil Corp. produces and sells wind-energy-driven engines. To finance its operations, Emil Corp. issued 15,000,000 of 20-year, 9% callable bonds on May 1, 2016 at their face amount, with interest payable on May 1 and November 1. The fiscal year of the company is the calendar year. Journalize the entries to record the following selected transactions: 2016 May 1. Issued the bonds for cash at their face amount. Nov. 1. Paid the interest on the bonds. 2022 Nov. 1. Called the bond issue at 96, the rate provided in the bond indenture. (Omit entry for payment of interest.)
Naval Inc. issued $200,000 face value bonds at a discount and received $190,000. At the end of 2018, the balance in the Discount on Bonds Payable account is $5,000. This years balance sheet will show a net liability of ________. A. $200,000 B. $180,000 C. $195,000 D. $205,000
Saverin, Inc. produces and sells outdoor equipment. On July 1, 2016, Saverin, Inc. issued 62,500,000 of 10-year, 9% bonds at a market (effective) interest rate of 8%, receiving cash of 66,747,178. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year. Instructions 1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds. 2. Journalize the entries to record the following: a. The first semiannual interest payment on December 31, 2016, and the amortization of the bond premium, using the interest method. (Round to the nearest dollar.) b. The interest payment on June 30, 2017, and the amortization of the bond premium, using the interest method. (Round to the nearest dollar.) 3. Determine the total interest expense for 2016.
Whirlie Inc. issued $300,000 face value, 10% paid annually, 10-year bonds for $319,251 when the market of interest was 9%. The company uses the effective-interest method of amortization. At the end of the year, the company will record ________. A. a credit to cash for $28,733 B. a debit to interest expense for $31,267 C. a debit to Discount on Bonds Payable for $1,267 D. a debit to Premium on Bonds Payable for $1.267
Chung Inc. issued $50,000 of 3-year bonds on January 1, 2018, with a stated rate of 4% and a market rate of 4%. The bonds paid interest semi-annually on June 30 and Dec. 31. How much money did the company receive when the bonds were issued? The bonds would be quoted at what rate?
(4: On Sep.1, 2010 Bros Company purchased 10000 of Handle production Ins., %9 bonds face value 100 $ per bond at cost of $ 967000 and paid 1000$ as commission to the dealer plus accrued interest at the purchase date in cash, the interest is payable each Jan. 1 and July 1 and the bonds mature at Jan.1, 2016. At April 2015 the company sold 90% of bonds at 99 $ per bond plus accrued interest in cash Required: Prepare the entries in 2010,201 1,2015
On January 1, 2015, LK Co purchased 5000, 5year, 9% Bonds from HM Co. at 96. Each bond costs P1000. Commission paid is P22,000. On December 31, 2015, the bonds are quoted @98, December 31, 2016, @ 102, December 31, 2017 @99 , December 31 2018 @ 101. ¼ of the bonds are sold on December 31, 2016 and the remaining on December 2018.Prepare all journal entries related to this investment assuming LK classified it as Trading Securities.Prepare all journal entries related to this investment assuming LK classified it as Available for sale Securities.How much is recognized in equity related on this investment each year assuming these are trading securities?How much is recognized in Profit or Loss related on this investment each year assuming these are available for sale securities? All data are the same as Problem 3 except that the bonds have no purchase price but a market interest of 12% on 12/31/2015.Prepare all journal entries related to this investment assuming LK classified it as Trading…
On January 1, 2018, HI company purchased P1,000,000, 12% bonds for P1,063,394, a price that yields 10%. Interest on these bonds is payable every December 31. On April 1, 2020, HI sold P600,000 face value bonds at 101 plus accrued interest. The debt investment is designated as at FVPL. The market value of the bonds were: Dec. 31, 2018-P108; Dec.31, 2019 - P106; Dec. 31, 2020 –P104. What is the amount of gain or loss on the sale of bonds on April 1, 2020?
On January 1, 2018, HI company purchased P1,000,000, 12% bonds for P1,063,394, a price that yields 10%. Interest on these bonds is payable every December 31. On April 1, 2020, HI sold P600,000 face value bonds at 101 plus accrued interest. The debt investment is designated as at FVPL. The market value of the bonds were: Dec. 31, 2018-P108; Dec.31, 2019 - P106; Dec. 31, 2020 –P104. How much is the interest income for year 2018?
On January 1, 2016, Malibu Co. purchased 1,000,000 10% bonds designated as financial asset at amortized cost. The bonds were purchased to yield 12%. Interest is payable annually every December 31. The bonds mature on December 31, 2020. On December 31, 2016, the bonds were selling at 99. On January 2, 2018, Malibu Co. sold 500,000 face value bonds at 101. The bonds were selling at 103 on December 31, 2018. 1. How much is the purchase price of the bonds on January 1, 2016? 2. How much is the carrying amount of the investments in bonds on December 31, 2016? 3. How much is the realized gain on sale of the investment in bonds on January 2, 2018? 4. How much should be reported as unrealized gain or loss as component of equity on December 31, 2018? 5. If the entity elected the fair value option, how much should be recognized as unrealized gain for 2016?
Rumpi Company purchased $50,000 of 7 percent bonds of Evermistress Corporation on January 1, 2015, for $48,689. The bonds mature in 3 years and the yield is 8 percent. The interest is payable on January 1 and July 1. Instructions 1. Complete the amortisation schedule below Bond Discount/ Premium Amortization Date Cash Received Interest Revenue Carrying Amount of Bonds 2. Prepare the journal entry on 1 January 2015, 1 July 2015, 31 December 2015, 1 January 2016 3. Assuming this bond is categorized under FVOCI, assume that the fair value on Dec 31. 2015 was $50.060. prepare the fair value adjustment entry 4. II Rumpi Company sells its investment in Evermistress on August 1, 2016, at 110 plus accrued interest. compute the realised gain/loss on the sale and record the sale of the bonds!