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Prepare journal entry to record the purchase of the bond. (Cre entered. Do not indent manually. If no entry is required, select "No

Prepare journal entry to record the purchase of the bond. (Cre entered. Do not indent manually. If no entry is required, select "No

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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On March 31, Pina Colada Corp. invests in a $1,000, 12% bond to be held for short-term trading purposes, and accounts for this investment using the FV-NI method. The bond's fair value when acquired was $970, but an additional $20 was paid (and debited to Interest Receivable) representing the interest accrued since the annual interest payment date of February 1. Pina Colada applies IFRS, and prepares financial statements each December 31. The effective yield on the bond is 12.50%, The fair value of the bond on December 31 is $963 and on February 1, when Pina Colada sells the bond, it is $958. Pina Colada Corp. does not use reversing entries. Prepare journal entry to record the purchase of the bond. (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)
Transcribed Image Text:On March 31, Pina Colada Corp. invests in a $1,000, 12% bond to be held for short-term trading purposes, and accounts for this investment using the FV-NI method. The bond's fair value when acquired was $970, but an additional $20 was paid (and debited to Interest Receivable) representing the interest accrued since the annual interest payment date of February 1. Pina Colada applies IFRS, and prepares financial statements each December 31. The effective yield on the bond is 12.50%, The fair value of the bond on December 31 is $963 and on February 1, when Pina Colada sells the bond, it is $958. Pina Colada Corp. does not use reversing entries. Prepare journal entry to record the purchase of the bond. (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)
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