QUESTION ONE On January 1, 2022, London CO. made an investment in $40,000 of the 9%, 5-year bonds of to hold these investments as a held-for-collection and selling investment. Instructions: 1. Prepare the amortization schedule. 2. Prepare London's journal entries for: (a) The purchase of the investment. (b) The receipt of annual interest on December 31 and discount amortization., (c) The year-end fair value adjustment. (Assume a zero balance in the Fair Value Adjustment account.) The bonds have a year-end fair value of $36,500.
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- Investment Premium Amortization Schedule On January 1, 2019, Lynch Company acquired 13% bonds with a face value of 50,000. The bonds pay interest on June 30 and December 31 and mature on December 31, 2021. Lynch paid 51,229.35, a price that yields a 12% effective annual interest rate. Required: 1. Record the purchase of the bonds. 2. Prepare an investment interest income and premium amortization schedule using the effective interest method. 3. Record the receipts of interest on June 30, 2019, and December 31, 2021.Transfer between Categories On December 31, 2018, Leslie Company held an investment in bonds of Kaufmann Company which it categorized as being held to maturity. At that time, the 8%, 100,000 face value bonds had a carrying value of 107,023.56 and were being amortized using the effective interest method based on a market rate of 7%. Interest on these bonds is paid annually each December 31. On December 31, 2019, after recording the interest earned, Leslie decided to reclassify the Kaufmann bonds to its available-for-sale category in anticipation of a major restructuring. At that time, the ending quoted market price for the bonds was 105,000. Required: Prepare the journal entries on December 31, 2019, to record the interest earned and the reclassification.Refer to the information in RE13-5. Assume that on December 31, 2019, the investment in Smith Corporation bonds has a market value of 12,500. Prepare the year-end journal entry to record the unrealized gain or loss.
- Refer to the information in RE13-5. Assume that on June 30, Aggie received interest on the Smith Corporation bonds. Prepare the June 30 journal entries to record the receipt of the interest. On April 30, 2019, Aggie Corporation purchased Smith Corporation 10%, 5-years bonds with a face value of 12,000 at par plus four months of accrued interest. Prepare the April 30 journal entry to record the purchase of these available-for-sale securities.Refer to the information in RE 13-3. Assume that on December 31, 2019, Wolfpack received interest on the Todd Corporation bonds. Wolfpack uses the straight-line method to amortize premiums and discounts. Prepare the December 31 journal entry to record the receipt of the interest. On July 1, 2019, Wolfpack Corporation purchases securities which it intends to buy and sell frequently. These securities consisted of todd Corporation 10%, 5-year bonds with a face value of 20,000 which were purchased for 18,500. Prepare the july 1 journal entry to record the purchase of these trading securities.Investment Discount Amortization Schedule On January 1, 2019, Rodgers Company purchased 200,000 face value, 10%, 3-year bonds for 190,165.35, a price that yields a 12% effective annual interest rate. The bonds pay interest semiannually on June 30 and December 31. Required: 1. Record the purchase of the bonds. 2. Prepare an investment interest income and discount amortization schedule using the effective interest method. 3. Record the receipts of interest on June 30, 2019, and June 30, 2021.
- 1- On January 1, 2019, Garfield AG made an investment in €70,000 of the 9%, 5-year bonds of Chester Corporation for €74,000, which provides an 11% return. Garfield plans to actively trade the bonds to profit from market interest rate changes. Prepare Garfield's journal entries for (a). the purchase of the investment, (b). the receipt of annual interest and discount amortization, and (c). the year-end fair value adjustment. The bonds have a year-end fair value of €76,000.Problem 1: An entity purchased 12% P1,000,000 face amount bonds at 105 plus accrued interest on February 1, 2019. Interest is payable semi-annual on April 1 and October 1. Bonds are dated April 1, 2018 and matures on April 1, 2023. Required: Compute for the initial cost of investment in bonds account. Problem 2: An entity purchased 12% P1,000,000 face amount bonds at 105 on February 1, 2019. Interest is payable semi-annual on April 1 and October 1. Bonds are dated April 1, 2018 and matures on April 1, 2023. Required: Compute for the initial cost of investment in bonds account. Problem 3: On January 2, 2019 an investor acquired P1,000,000 face value bonds, dated January 2, 2019 and will mature in 3 years and bear 12% interest payable annually every December 31. The bonds will yield an effective interest of 10%. Required: 1. Compute for the market value (purchase price) of the bonds. 2. Compute for the amortization of the bond discount/premium using straight-line method of amortization.…Following are the non-strategic Investment transactions of Corona Inc.: 2023 Jan. 1 Purchased for $91,145 an 8.58, 586,000 bond that matures in 20 years from anna Corporation when the market interest rate was 7.98. There was a $50 transaction fee included in the above-noted payment amount. Interest is paid semiannually beginning June 30, 2023. The acquisition vas made with intention to hold to maturity. June 30 Received interest on the bond. July 1 Paid $126,633 for a Trust Inc. bond with a par value of $131,000 and a fifteen-years ters. The bond pays interest quarterly beginning September 30, 2023, at the annual rate of 8.38; the market interest rate on the date of purchase was 8.7%. There was a $50 transaction fee included in the above-soted payment amount. Sept. 30 Received interest on the Trust bond. Dec. 31 Received interest on the lanna and Trust bonds. 31 The fair values of the bonds on this date equalled the fair values. Required: 1. For each of the bond investments, prepare an…
- Current Attempt in Progress Kingbird Corporation purchased on January 1, 2025, as a held-to-maturity investment, $65,000 of the 8%, 5-year bonds of Harrison, Inc. for $70,545, which provides a 6% return. The bonds pay interest semiannually. Prepare Kingbird's journal entries for (a) the purchase of the investment, and (b) the receipt of semiannual interest and premium amortization. Assume effective-interest amortization is used. (List all debit entries before credit entries. 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 O for the amounts. Round answers to O decimal places, e.g. 5,125.) No. (a) (b) Date Account Titles and Explanation Debit CrediTudor Company acquired $500,000 of Carr Corporation bonds for $487,706.69 on January 1, 2019. The bonds carry an 11% stated interest rate, pay interest semiannually on January 1 and July 1, were issued to yield 12%, and are due January 1, 2022. Required: 1. Prepare an investment interest income and discount amortization schedule using the: a. straight-line method b. effective interest method 2. Prepare the July 1, 2021, journal entries to record the interest income under both methods.2. Carow SA purchased on January 1, 2019, as a held-for- collection investment, €50,000 of the 8%, 5-year bonds of Harrison, Inc. for €65,000, which provides a 6% return. The bonds pay interest semiannually. Prepare Carow's journal entries for (a). the purchase of the investment, and (b). the receipt of semiannual interest and premium amortization.