Presented below is an amortization schedule related to Flint Company's 5-year, $150,000 bond with a 7% interest rate and a 4% yield, purchased on December 31, 2023, for $170,034. Date Cash Received Interest Revenue Bond Premium Carrying Amount Amortization of Bonds 12/31/23 $170,034 12/31/24 $10,500 $6,801 $3,699 166,335 12/31/25 10,500 6,653 3,847 162,488 12/31/26 10,500 6,500 4,000 158,488 12/31/27 10,500 6,340 4,160 154,328 12/31/28 10,500 6,172 4,328 150,000 The following schedule presents a comparison of the amortized cost and fair value of the bonds at year-end. 12/31/24 12/31/25 12/31/26 12/31/27 12/31/28 Amortized cost $166,335 $162,488 $158,488 $154,328 $150,000 Fair value 165,800 164,700 160,400 155,400 150,000 (a) Prepare the journal entry to record the purchase of these bonds on December 31, 2023, assuming the bonds are classified as held-to-maturity securities. (b) Prepare the journal entry related to the held-to-maturity bonds for 2024. (c) Prepare the journal entry related to the held-to-maturity bonds for 2026. (d) Prepare the journal entry to record the purchase of these bonds, assuming they are classified as available-for-sale. (e) Prepare the journal entries related to the available-for-sale bonds for 2024. (f) Prepare the journal entries related to the available-for-sale bonds for 2026.
Presented below is an amortization schedule related to Flint Company's 5-year, $150,000 bond with a 7% interest rate and a 4% yield, purchased on December 31, 2023, for $170,034. Date Cash Received Interest Revenue Bond Premium Carrying Amount Amortization of Bonds 12/31/23 $170,034 12/31/24 $10,500 $6,801 $3,699 166,335 12/31/25 10,500 6,653 3,847 162,488 12/31/26 10,500 6,500 4,000 158,488 12/31/27 10,500 6,340 4,160 154,328 12/31/28 10,500 6,172 4,328 150,000 The following schedule presents a comparison of the amortized cost and fair value of the bonds at year-end. 12/31/24 12/31/25 12/31/26 12/31/27 12/31/28 Amortized cost $166,335 $162,488 $158,488 $154,328 $150,000 Fair value 165,800 164,700 160,400 155,400 150,000 (a) Prepare the journal entry to record the purchase of these bonds on December 31, 2023, assuming the bonds are classified as held-to-maturity securities. (b) Prepare the journal entry related to the held-to-maturity bonds for 2024. (c) Prepare the journal entry related to the held-to-maturity bonds for 2026. (d) Prepare the journal entry to record the purchase of these bonds, assuming they are classified as available-for-sale. (e) Prepare the journal entries related to the available-for-sale bonds for 2024. (f) Prepare the journal entries related to the available-for-sale bonds for 2026.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Presented below is an amortization schedule related to Flint Company's 5-year, $150,000 bond with a 7%
interest rate and a 4% yield, purchased on December 31, 2023, for $170,034.
Date
Cash
Received
Interest
Revenue
Bond
Premium
Carrying
Amount
Amortization
of Bonds
12/31/23
$170,034
12/31/24
$10,500
$6,801
$3,699
166,335
12/31/25
10,500
6,653
3,847
162,488
12/31/26
10,500
6,500
4,000
158,488
12/31/27
10,500
6,340
4,160
154,328
12/31/28
10,500
6,172
4,328
150,000
The following schedule presents a comparison of the amortized cost and fair value of the bonds at year-end.
12/31/24 12/31/25 12/31/26
12/31/27
12/31/28
Amortized cost $166,335 $162,488
$158,488
$154,328
$150,000
Fair value
165,800
164,700
160,400
155,400
150,000
(a)
Prepare the journal entry to record the purchase of these bonds on December 31, 2023, assuming the
bonds are classified as held-to-maturity securities.
(b)
Prepare the journal entry related to the held-to-maturity bonds for 2024.
(c)
Prepare the journal entry related to the held-to-maturity bonds for 2026.
(d)
Prepare the journal entry to record the purchase of these bonds, assuming they are classified as
available-for-sale.
(e)
Prepare the journal entries related to the available-for-sale bonds for 2024.
(f)
Prepare the journal entries related to the available-for-sale bonds for 2026.
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