Orange Company purchased as a long-term investment $100 million of 10% bonds, dated July 1, on July 1, 2021. Management wants to trade the investment actively in the market. For bonds of similar risk and maturity the market yield was 12%. The price paid for the bonds was $90 million. Interest is received semiannually on June 30 and December 31. Due to changing market conditions, the fair value of the bonds at December 31, 2021, was $91 million. Requirements: Prepare the journal entry at the initial purchase date on July 1, 2021 Please prepare journal entry on Dec 31, 2021 when Orange Company received the interest payment 3. At what amount will Orange Company report its investment in the December 31, 2021 balance sheet? Prepare any adjusting entry, if necessary.
Orange Company purchased as a long-term investment $100 million of 10% bonds, dated July 1, on July 1, 2021. Management wants to trade the investment actively in the market. For bonds of similar risk and maturity the market yield was 12%. The price paid for the bonds was $90 million. Interest is received semiannually on June 30 and December 31. Due to changing market conditions, the fair
Requirements:
- Prepare the
journal entry at the initial purchase date on July 1, 2021 - Please prepare journal entry on Dec 31, 2021 when Orange Company received the interest payment
3. At what amount will Orange Company report its investment in the December 31, 2021
4. Company decides to sell the investment on January 7, 2022 when the market price increased to $92. Please prepare the TWO journal entries of sales transaction on January 7, 2022.
5. Suppose Orange Company originally classified this investment as available-for-sale, at what amount will Orange Company report its investment in the December 31, 2021 balance sheet? Please prepare any journal entry necessary.
7. Suppose Orange Company originally classified this investment as available-for-sale, company decides to sell the investment on January 7, 2022 when the market price increased to $92. Please prepare the three journal entries on January 7, 2022.
8. Suppose Orange Company originally classified this investment as held-to-maturity, at what amount will Orange Company report its investment in the December 31, 2021 balance sheet? Please prepare any journal entry necessary.
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