Problem 15-3A (Algo) Debt investments in available-for-sale securities; unrealized and realized gains and losses LO P3 [The following information applies to the questions displayed below] Stoll Company's long-term available-for-sale portfolio at the start of this year consists of the following. Available-for-Sale Securities Company A bonds Company B notes Company C bonds Fair Value $ 495,000 151,000 647,710 Stoll enters into the following transactions involving its available-for-sale debt securities this year. January 29 Sold one-half of the Company B notes for $78,000. July 6 Purchased Company X bonds for $123,600. November 13 Purchased Company Z notes for $267,900. December 9 Sold all of the Company A bonds for $518,300. Fair values at December 31 are B. $84,300; C, $604,800, X, $100,000, and Z. $288,000. Cost $530,700 159,250 661,000

Problem 15-3A (Algo) Debt investments in available-for-sale securities; unrealized and realized gains and losses LO P3 [The following information applies to the questions displayed below] Stoll Company's long-term available-for-sale portfolio at the start of this year consists of the following. Available-for-Sale Securities Company A bonds Company B notes Company C bonds Fair Value $ 495,000 151,000 647,710 Stoll enters into the following transactions involving its available-for-sale debt securities this year. January 29 Sold one-half of the Company B notes for $78,000. July 6 Purchased Company X bonds for $123,600. November 13 Purchased Company Z notes for $267,900. December 9 Sold all of the Company A bonds for $518,300. Fair values at December 31 are B. $84,300; C, $604,800, X, $100,000, and Z. $288,000. Cost $530,700 159,250 661,000

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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PART 1 Recording Entries for AFS Debt Securities— Effective Interest Method Adjust FVA at Year-End On July 1, 2020, West Company purchased for cash, twelve $10,000 bonds of North Corporation to yield 10%. The bonds pay 9% interest, payable on a semiannual basis each July 1 and January 1, and mature on July 1, 2023. The bonds are classified as AFS securities. The annual reporting period ends December 31. Assume the effective interest method of amortization of any discount or premium. Amortization Schedule - PART 1 Journal Entries and FS Presentation for 2020 - PART 1 Journal Entries for 2021 - PART 2 a. Prepare a bond amortization schedule for 2020 and 2021 using the effective interest method. Note: Round each amount entered into the schedule to the nearest whole dollar. Date StatedInterest MarketInterest DiscountAmortization BondAmortized Cost Jul. 1, 2020 Answer Jan. 1, 2021 Answer Answer Answer Answer Jul. 1, 2021 Answer Answer Answer Answer b.…
Exercise 14-9 (Algo) Issuance of bonds; effective interest; amortization schedule; financial statement effects [LO14-2] When Patey Pontoons issued 6% bonds on January 1, 2024, with a face amount of $680,000, the market yield for bonds of similar risk and maturity was 11%. The bonds mature December 31, 2027 (4 years). Interest is paid semiannually on June 30 and December 31. Required: Determine the price of the bonds at January 1, 2024. (fill out table provided in image) Prepare the appropriate journal entries at maturity on December 31, 2027. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)
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QUESTION Part A) On January 1, 2023 its issue date, Diogenes Inc. purchased a 9%, $200,000, 10-year bond. Interest is paid annually on December 31. Diogenes uses the amortized cost model and the effective interest method for amortizing premium or discount. The current market rate was 10% and as a result Diogenes paid $187,711 for the bonds. On December 31, 2023, the bonds have a market value of $185,000. Diogenes applies IFRS. Instructions Record the receipt of interest for 2023. Part B) Zeus Corporation is considering making a significant long-term investment in Ares Ltd., a young and very promising company. Zeus decides to make a smaller investment first, and if Ares turns out to be successful, Zeus intends to make an additional investment to reach significant influence. Ares has 110,000 shares outstanding. On January 1, 2023, Ares issues Zeus 10,000 shares for $400,000 in cash (so now there are 120,000 shares outstanding). Additional information: 1. On November 1, 2023, Ares…
RCISES i S Exercise 14-17A (Algo) Computing bond interest and price; recording bond issuance LO C2 Brin Company issues bonds with a par value of $700,000. The bonds mature in 6 years and pay 6% annual interest in semiannual payments. The annual market rate for the bonds is 8%. (Table B.1 Table B.2, Table B.3, and Table B.4) Note: Use appropriate factor(s) from the tables provided. 1. Compute the price of the bonds as of their issue date. 2. Prepare the journal entry to record the bonds' issuance. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the price of the bonds as of their issue date. Note: Round all table values to 4 decimal places, and use the rounded table values in calculations. Round intermediate calculations to the nearest dollar amount. Table Values are Based on: Cash Flow Par (maturity) value Interest (annuity) Price of bonds n = i= Table Value Amount Required 1 Present Value $ Saved Required 2 > 0
P16.1 (LO 1) (Debt Securities) Presented below is an amortization schedule related to Spangler Company's 5-year, $100,000 bond with a 7% interest rate and a 5% yield, purchased on December 31, 2023, for $108,660. Date Cash Received 12/31/23 12/31/24 $7,000 12/31/25 7,000 12/31/26 7,000 12/31/27 12/31/28 7,000 7,000 Interest Revenue $5,433 5,354 5,272 5,186 5,095 Bond Premium Amortization The following schedule presents a comparison of the amortized cost and fair value of the bonds at year-end. Instructions Amortized cost Fair value 12/31/24 $107,093 106,500 12/31/25 $105,447 107,500 $1,567 1,646 1,728 1,814 1,905 Carrying Amount of Bonds $108,660 107,093 105,447 103,719 101,905 100,000 12/31/26 $103,719 105,650 12/31/27 $101,905 103,000 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 (entries) related to the held-to-maturity bonds for 2024. c. Prepare…
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Exercise 14-14 (Algo) New debt issues; offerings announcements [LO14-2] When companies offer new debt security issues, they publicize the offerings in the financial press and on Internet sites. Assume the following were among the debt offerings reported in December 2024: New Securities Issues Corporate National Equipment Transfer Corporation—$212 million bonds via lead managers Second Tennessee Bank N.A. and Morgan, Dunavant & Company, according to a syndicate official. Terms: maturity, December 15, 2033; coupon 7.58%; issue price, par; yield, 7.58%; noncallable; debt ratings: Ba-1 (Moody's Investors Service, Incorporated), BBB+ (Standard & Poor's). IgWig Incorporated—$362 million of notes via lead manager Stanley Brothers, Incorporated, according to a syndicate official. Terms: maturity, December 1, 2035; coupon, 6.58%; Issue price, 99; yield, 6.68%; call date, NC; debt ratings: Baa-1 (Moody's Investors Service, Incorporated), A (Standard & Poor's).…
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Problem 12-3 (Algo) Securities available-for-sale; bond investment; effective interest; financial statement effects [LO12-1, 12-4] Fuzzy Monkey Technologies, Incorporated purchased as a long-term investment $60 million of 6% bonds, dated January 1, on Janua 1, 2024. Management intends to have the investment available for sale when circumstances warrant. For bonds of similar risk and maturity the market yield was 8%. The price paid for the bonds was $46 million. Interest is received semiannually on June 30 and December 31. Due to changing market conditions, the fair value of the bonds at December 31, 2024, was $50 million. Required: 1. to 3. Prepare the relevant journal entries on the respective dates (record the interest at the effective rate). 4-6. At what amount will Fuzzy Monkey report its investment in the December 31, 2024, balance sheet? 4-b. Prepare the entry necessary to achieve this reporting objective. 5. How would Fuzzy Monkey's 2024 statement of cash flows be affected by…