On September 1, Year 2, the 401 Company acquired P1,000,000 face value, 12% bonds of Key Company at 104. The bonds were dated May 1, Year 2, and mature on april 30, Year 5, with interest payable each October 31 and April 30. The company did not elect to measure the securities at fair value. What entry should 401 Company make to record the purchase of the bonds on September 1, Year 2? Debt Investments 1,080,000 Cash 1,080,000 Debt Investments 1,000,000 B Premium on Debt Inv. 80,000 Cash 1,080,000 Debt Investments 1,080,000 Interest Receivable 40,000 Cash 1,040,000 Debt Investments 1,040,000 Interest Receivable 40,000 Cash 1,080,000

On September 1, Year 2, the 401 Company acquired P1,000,000 face value, 12% bonds of Key Company at 104. The bonds were dated May 1, Year 2, and mature on april 30, Year 5, with interest payable each October 31 and April 30. The company did not elect to measure the securities at fair value. What entry should 401 Company make to record the purchase of the bonds on September 1, Year 2? Debt Investments 1,080,000 Cash 1,080,000 Debt Investments 1,000,000 B Premium on Debt Inv. 80,000 Cash 1,080,000 Debt Investments 1,080,000 Interest Receivable 40,000 Cash 1,040,000 Debt Investments 1,040,000 Interest Receivable 40,000 Cash 1,080,000

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 7RE: Refer to the information in RE13-5. Assume that on December 31, 2019, the investment in Smith...

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Rekya Mart Inc. is a general merchandise retail company that began operations on January 1, Year 1. The following transactions relate to debt investments acquired by Rekya Mart Inc., which has a fiscal year ending on December 31: Instructions 1. Journalize the entries to record these transactions. 2. If the bond portfolio is classified as available for sale, what impact would this have on financial statement disclosure?
Refer to the information in RE13-5. Assume that on December 31, 2019, the investment in Smith Corporation bonds has a market value of 12,500. Prepare the year-end journal entry to record the unrealized gain or loss.
Use the following information on a company's investments in debt securities to answer the following question. The company's accounting year ends December 31. Investment Date of Acquisition 9/20/23 $38,000 Colt Compan y bonds Cost Fair Value Date Sold Selling 12/31/23 Price $37,000 2/10/24 $42,000 Dana Compan y bonds 10/2/23 14,000 14,200 1/17/24 13,000 If the above investments are categorized as available-for-sale securities, what is the net effect on 2024 other comprehensive income? Select one: a. $ 800 increase b. $0 c. $3,800 increase d. $ 800 decrease
3. On October 1, Dennis Company purchased P200,000 face value 12% bonds for 98 plus accrued interest and brokerage fees and classified them as held-to-maturity securities. Interest is paid semiannually on January 1 and July 1. Brokerage fees for this transaction were P700. At what amount should this acquisition of bonds be recorded? a. P196,000 b. P196,700 c. P202,000 d. P202,700
Ivanhoe Company purchased $324000 of bonds for $339000. If Ivanhoe intends to hold the securities to maturity, the entry to record the investment includes O a debit to Debt Investments at $324000. O a credit to Premium on Debt Investments of $15,000. O a debit to Debt Investments at $339000. O none of these choices are correct.
Example 2) Fair value through profit or loss: Debt investment ABC Co. had the following transactions pertaining its trading investments: Feb. 1, 2021 Purchased $200,000 of 3-year, 6% bonds at 104. Interest is payable on each August 1 and February 1. Aug. 1, 2021 Received interest on the bonds. Dec. 31, 2021 The fair value of the bonds was 100. Instruction: Record the above transactions, using the fair value through profit or loss model. Also, prepare any required adjusting entry/entries at December 31, 2021. ABC Co. has a December 31 year-end.
1. How much gain or (loss) should be recognized on the sale of Orange bonds? 2. How much unrealized gain or (loss) is to be recognized in the income statement for the current year? 3. How much is the interest income at year end?
Bonds Payable has a balance of $987,000 and Premium on Bonds Payable has a balance of $10,857. If the issuing corporation redeems the bonds at 102, what is the amount of gain or loss on redemption? Select the correct answer. a-$10,857 loss b-$8,883 gain c-$10,857 gain d-$8,883 loss
How do I journalize the bonds?
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Bonds Payable has a balance of $867,000 and Premium on Bonds Payable has a balance of $9,537. If the issuing corporation redeems the bonds at 103, what is the amount of gain or loss on redemption? Oa. $16,473 loss Ob. $9,537 gain Oc. $893,010 gain Od. $9,537 loss
Q7- Khalid Corporation had the following transactions relating to debt investments: Jan. 1 Purchased 50, $1,000, 12% Naved Company bonds for $50,000 plus broker's fees of $1,500. Interest is payable semiannually on January 1 and July 1. July 1 Received semiannual interest from Naved Company bonds. July 1 Sold 30 Naved Company bonds for $30,000, less $800 broker's fees. Instructions (a). Journalize the transactions, and (b). prepare the adjusting entry for the accrual of interest on December 31.