On January 1, 2020, Teal Company purchased 9% bonds having a maturity value of $370,000, for $400,342.96. The bonds provide the bondholders with a 7% yield. They are dated January 1, 2020, and mature January 1, 2025, with interest received on January 1 of each year. Teal Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category. **Journal Entry Form for Interest Revenue and Amortization on December 31, 2020**Prepare the journal entry to record the interest revenue and the amortization at December 31, 2020. *Instructions*:- Round answers to two decimal places (e.g., 2,525.25).- Credit account titles are automatically indented when an amount is entered. Do not indent manually.- If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.**Table Structure**:1. **Columns:** - **Date**: Displays the date of the journal entry. - **Account Titles and Explanation**: Space to enter the account names and descriptions. - **Debit**: Column for entering debit amounts. - **Credit**: Column for entering credit amounts.2. **Rows**: - Initial Date Row: "Dec. 31, 2020" followed by empty fields for account titles and amounts.**Instructions for Usage**:Input the relevant account titles under "Account Titles and Explanation" and enter the corresponding amounts in either the Debit or Credit column as applicable. If a row is not needed, input "No Entry" and a zero (0) for the amounts.

Solution:- Preparation of journal entry as follows under:- Working notes:- Interest Revenue for 2020…

Answered: Prepare the journal entry to record the…

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 January 1, 2020, Teal Company purchased 9% bonds having a maturity value of $370,000, for $400,342.96. The bonds provide the bondholders with a 7% yield. They are dated January 1, 2020, and mature January 1, 2025, with interest received on January 1 of each year. Teal Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category.

**Journal Entry Form for Interest Revenue and Amortization on December 31, 2020**

Prepare the journal entry to record the interest revenue and the amortization at December 31, 2020.

*Instructions*:
- Round answers to two decimal places (e.g., 2,525.25).
- Credit account titles are automatically indented when an amount is entered. Do not indent manually.
- If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.

**Table Structure**:

1. **Columns:**
- **Date**: Displays the date of the journal entry.
- **Account Titles and Explanation**: Space to enter the account names and descriptions.
- **Debit**: Column for entering debit amounts.
- **Credit**: Column for entering credit amounts.

2. **Rows**:
- Initial Date Row: "Dec. 31, 2020" followed by empty fields for account titles and amounts.

**Instructions for Usage**:

Input the relevant account titles under "Account Titles and Explanation" and enter the corresponding amounts in either the Debit or Credit column as applicable. If a row is not needed, input "No Entry" and a zero (0) for the amounts.

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