Presented below is an amortization schedule related to Teal Company’s 5-year, $130,000 bond with a 6% interest rate and a 4% yield, purchased on December 31, 2018, for $141,575. Date Cash Received Interest Revenue Bond Premium Amortization Carrying Amount of Bonds 12/31/18 $141,575 12/31/19 $7,800 $5,663 $2,137 139,438 12/31/20 7,800 5,578 2,222 137,216 12/31/21 7,800 5,489 2,311 134,905 12/31/22 7,800 5,396 2,404 132,501 12/31/23 7,800 5,299 2,501 130,000 The following schedule presents a comparison of the amortized cost and fair value of the bonds at year-end. 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 Amortized cost $139,438 $137,216 $134,905 $132,501 $130,000 Fair value $138,900 $139,500 $137,000 $133,600 $130,000 (a) Prepare the journal entry to record the purchase of these bonds on December 31, 2018, assuming the bonds are classified as held-to-maturity securities. (b) Prepare the journal entry related to the held-to-maturity bonds for 2019. (c) Prepare the journal entry related to the held-to-maturity bonds for 2021. (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 2019. (f) Prepare the journal entries related to the available-for-sale bonds for 2021. (Credit account titles are automatically indented when 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.) No. Date Account Titles and Explanation Debit Credit (a) choose a transaction date Dec. 31, 2018Dec. 31, 2019Dec. 31, 2021 enter an account title enter a debit amount enter a credit amount enter an account title enter a debit amount enter a credit amount (b) choose a transaction date Dec. 31, 2018Dec. 31, 2019Dec. 31, 2021 enter an account title enter a debit amount enter a credit amount enter an account title enter a debit amount enter a credit amount enter an account title enter a debit amount enter a credit amount (c) choose a transaction date Dec. 31, 2018Dec. 31, 2019Dec. 31, 2021 enter an account title enter a debit amount enter a credit amount enter an account title enter a debit amount enter a credit amount enter an account title enter a debit amount enter a credit amount (d) choose a transaction date Dec. 31, 2018Dec. 31, 2019Dec. 31, 2021 enter an account title enter a debit amount enter a credit amount enter an account title enter a debit amount enter a credit amount (e) choose a transaction date Dec. 31, 2018Dec. 31, 2019Dec. 31, 2021 enter an account title to record interest revenue enter a debit amount enter a credit amount enter an account title to record interest revenue enter a debit amount enter a credit amount enter an account title to record interest revenue enter a debit amount enter a credit amount (To record interest revenue.) enter an account title to record adjustment enter a debit amount enter a credit amount enter an account title to record adjustment enter a debit amount enter a credit amount (To record adjustment.) (f) choose a transaction date Dec. 31, 2018Dec. 31, 2019Dec. 31, 2021 enter an account title to record interest revenue enter a debit amount enter a credit amount enter an account title to record interest revenue enter a debit amount enter a credit amount enter an account title to record interest revenue enter a debit amount enter a credit amount (To record interest revenue.) enter an account title to record adjustment enter a debit amount enter a credit amount enter an account title to record adjustment enter a debit amount enter a credit amount (To record adjustment.)

Presented below is an amortization schedule related to Teal Company’s 5-year, $130,000 bond with a 6% interest rate and a 4% yield, purchased on December 31, 2018, for $141,575. Date Cash Received Interest Revenue Bond Premium Amortization Carrying Amount of Bonds 12/31/18 $141,575 12/31/19 $7,800 $5,663 $2,137 139,438 12/31/20 7,800 5,578 2,222 137,216 12/31/21 7,800 5,489 2,311 134,905 12/31/22 7,800 5,396 2,404 132,501 12/31/23 7,800 5,299 2,501 130,000 The following schedule presents a comparison of the amortized cost and fair value of the bonds at year-end. 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 Amortized cost $139,438 $137,216 $134,905 $132,501 $130,000 Fair value $138,900 $139,500 $137,000 $133,600 $130,000 (a) Prepare the journal entry to record the purchase of these bonds on December 31, 2018, assuming the bonds are classified as held-to-maturity securities. (b) Prepare the journal entry related to the held-to-maturity bonds for 2019. (c) Prepare the journal entry related to the held-to-maturity bonds for 2021. (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 2019. (f) Prepare the journal entries related to the available-for-sale bonds for 2021. (Credit account titles are automatically indented when 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.) No. Date Account Titles and Explanation Debit Credit (a) choose a transaction date Dec. 31, 2018Dec. 31, 2019Dec. 31, 2021 enter an account title enter a debit amount enter a credit amount enter an account title enter a debit amount enter a credit amount (b) choose a transaction date Dec. 31, 2018Dec. 31, 2019Dec. 31, 2021 enter an account title enter a debit amount enter a credit amount enter an account title enter a debit amount enter a credit amount enter an account title enter a debit amount enter a credit amount (c) choose a transaction date Dec. 31, 2018Dec. 31, 2019Dec. 31, 2021 enter an account title enter a debit amount enter a credit amount enter an account title enter a debit amount enter a credit amount enter an account title enter a debit amount enter a credit amount (d) choose a transaction date Dec. 31, 2018Dec. 31, 2019Dec. 31, 2021 enter an account title enter a debit amount enter a credit amount enter an account title enter a debit amount enter a credit amount (e) choose a transaction date Dec. 31, 2018Dec. 31, 2019Dec. 31, 2021 enter an account title to record interest revenue enter a debit amount enter a credit amount enter an account title to record interest revenue enter a debit amount enter a credit amount enter an account title to record interest revenue enter a debit amount enter a credit amount (To record interest revenue.) enter an account title to record adjustment enter a debit amount enter a credit amount enter an account title to record adjustment enter a debit amount enter a credit amount (To record adjustment.) (f) choose a transaction date Dec. 31, 2018Dec. 31, 2019Dec. 31, 2021 enter an account title to record interest revenue enter a debit amount enter a credit amount enter an account title to record interest revenue enter a debit amount enter a credit amount enter an account title to record interest revenue enter a debit amount enter a credit amount (To record interest revenue.) enter an account title to record adjustment enter a debit amount enter a credit amount enter an account title to record adjustment enter a debit amount enter a credit amount (To record adjustment.)

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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Presented below is an amortization schedule related to Teal Company’s 5-year, $130,000 bond with a 6% interest rate and a 4% yield, purchased on December 31, 2018, for $141,575.

Date	Cash Received	Interest Revenue	Bond Premium Amortization	Carrying Amount of Bonds
12/31/18				$141,575
12/31/19	$7,800	$5,663	$2,137	139,438
12/31/20	7,800	5,578	2,222	137,216
12/31/21	7,800	5,489	2,311	134,905
12/31/22	7,800	5,396	2,404	132,501
12/31/23	7,800	5,299	2,501	130,000

The following schedule presents a comparison of the amortized cost and fair value of the bonds at year-end.

	12/31/19	12/31/20	12/31/21	12/31/22	12/31/23
Amortized cost	$139,438	$137,216	$134,905	$132,501	$130,000
Fair value	$138,900	$139,500	$137,000	$133,600	$130,000

(a)		Prepare the journal entry to record the purchase of these bonds on December 31, 2018, assuming the bonds are classified as held-to-maturity securities.
(b)		Prepare the journal entry related to the held-to-maturity bonds for 2019.
(c)		Prepare the journal entry related to the held-to-maturity bonds for 2021.
(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 2019.
(f)		Prepare the journal entries related to the available-for-sale bonds for 2021.

(Credit account titles are automatically indented when 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.)

No.	Date	Account Titles and Explanation	Debit	Credit
(a)	choose a transaction date Dec. 31, 2018Dec. 31, 2019Dec. 31, 2021	enter an account title	enter a debit amount	enter a credit amount
		enter an account title	enter a debit amount	enter a credit amount
(b)	choose a transaction date Dec. 31, 2018Dec. 31, 2019Dec. 31, 2021	enter an account title	enter a debit amount	enter a credit amount
		enter an account title	enter a debit amount	enter a credit amount
		enter an account title	enter a debit amount	enter a credit amount
(c)	choose a transaction date Dec. 31, 2018Dec. 31, 2019Dec. 31, 2021	enter an account title	enter a debit amount	enter a credit amount
		enter an account title	enter a debit amount	enter a credit amount
		enter an account title	enter a debit amount	enter a credit amount
(d)	choose a transaction date Dec. 31, 2018Dec. 31, 2019Dec. 31, 2021	enter an account title	enter a debit amount	enter a credit amount
		enter an account title	enter a debit amount	enter a credit amount
(e)	choose a transaction date Dec. 31, 2018Dec. 31, 2019Dec. 31, 2021	enter an account title to record interest revenue	enter a debit amount	enter a credit amount
		enter an account title to record interest revenue	enter a debit amount	enter a credit amount
		enter an account title to record interest revenue	enter a debit amount	enter a credit amount
		(To record interest revenue.)
		enter an account title to record adjustment	enter a debit amount	enter a credit amount
		enter an account title to record adjustment	enter a debit amount	enter a credit amount
		(To record adjustment.)
(f)	choose a transaction date Dec. 31, 2018Dec. 31, 2019Dec. 31, 2021	enter an account title to record interest revenue	enter a debit amount	enter a credit amount
		enter an account title to record interest revenue	enter a debit amount	enter a credit amount
		enter an account title to record interest revenue	enter a debit amount	enter a credit amount
		(To record interest revenue.)
		enter an account title to record adjustment	enter a debit amount	enter a credit amount
		enter an account title to record adjustment	enter a debit amount	enter a credit amount
		(To record adjustment.)

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