Prepare journal entries to record the initial investment, receipt of interest, and recognition of interest income in each of the th years, and the maturity of the bond at the end of the third year. (Credit account titles are automatically indented when the amount entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debi entries before credit entries. Round answers to 2 decimal places, e.g. 52.75.) Date Account Titles and Explanation Day 1 Bond Investment at Amortized Cost Cash End of Year 1 Cash Bond Investment at Amortized Cost Interest Income End of Year 2 Cash Debit 85.83 83.83 85.83 Credit 85.83 68.11 13
Prepare journal entries to record the initial investment, receipt of interest, and recognition of interest income in each of the th years, and the maturity of the bond at the end of the third year. (Credit account titles are automatically indented when the amount entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debi entries before credit entries. Round answers to 2 decimal places, e.g. 52.75.) Date Account Titles and Explanation Day 1 Bond Investment at Amortized Cost Cash End of Year 1 Cash Bond Investment at Amortized Cost Interest Income End of Year 2 Cash Debit 85.83 83.83 85.83 Credit 85.83 68.11 13
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Riverbed Corp. invested in a three-year, $100 face value, 7% bond paying $85.83. At this price, the bond will yield a 13% return. Interest is payable annually. Riverbed uses the amortized cost model of accounting for investments. Prepare

Transcribed Image Text:Prepare journal entries to record the initial investment, receipt of interest, and recognition of interest income in each of the th
years, and the maturity of the bond at the end of the third year. (Credit account titles are automatically indented when the amount
entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debi
entries before credit entries. Round answers to 2 decimal places, e.g. 52.75.)
Date
Account Titles and Explanation
Day 1
Bond Investment at Amortized Cost
Cash
End of
Year 1
Cash
Bond Investment at Amortized Cost
Interest Income
End of
Year 2
Cash
Debit
85.83
83.83
85.83
Credit
85.83
68.11
13
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