Several years ago, Brant, Incorporated, sold $1,020,000 in bonds to the public. Annual cash interest of 8 percent ($81,600) was to be paid on this debt. The bonds were issued at a discount to yield 10 percent. At the beginning of 2022, Zack Corporation (a wholly owned subsidiary of Brant) purchased $170,000 of these bonds on the open market for $191,000, a price based on an effective inter rate of 6 percent. The bond liability had a carrying amount on that date of $900,000. Assume Brant uses the equity method to acco internally for its investment in Zack. Required: a. & b. What consolidation entry would be required for these bonds on December 31, 2022 and December 31, 2024? Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your intermediate calculations and final answers to nearest whole number. No 1 2 Date December 31, 202 Bonds payable Loss on retirement of debt Interest income Answer is not complete. Accounts Investment in bonds Interest expense December 31, 202 Bonds payable Interest income Investment in Zack Investment in bonds Interest expense Debit 151,400 41,000 11,460 154,634 186,592 186,592 186,592 186,592 Credit 188,860 15,000

Several years ago, Brant, Incorporated, sold $1,020,000 in bonds to the public. Annual cash interest of 8 percent ($81,600) was to be paid on this debt. The bonds were issued at a discount to yield 10 percent. At the beginning of 2022, Zack Corporation (a wholly owned subsidiary of Brant) purchased $170,000 of these bonds on the open market for $191,000, a price based on an effective inter rate of 6 percent. The bond liability had a carrying amount on that date of $900,000. Assume Brant uses the equity method to acco internally for its investment in Zack. Required: a. & b. What consolidation entry would be required for these bonds on December 31, 2022 and December 31, 2024? Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your intermediate calculations and final answers to nearest whole number. No 1 2 Date December 31, 202 Bonds payable Loss on retirement of debt Interest income Answer is not complete. Accounts Investment in bonds Interest expense December 31, 202 Bonds payable Interest income Investment in Zack Investment in bonds Interest expense Debit 151,400 41,000 11,460 154,634 186,592 186,592 186,592 186,592 Credit 188,860 15,000

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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Arrieta Company purchased $2,250,000 of 8% bonds of Baez Company on January 1, 2023, paying $1,969,601. The bonds mature January 1, 2033; interest is payable each July 1 and January 1. The effective yield on the bonds is 10%. Arietta Company uses the effective-interest method and plans to hold these bonds to maturity. What journal entry is made by Arrieta Company on January 1, 2023?
Several years ago Brant, Inc., sold $850,000 in bonds to the public. Annual cash interest of 9 percent ($76,500) was to be paid on this debt. The bonds were issued at a discount to yield 12 percent. At the beginning of 2016, Zack Corporation (a wholly owned subsidiary of Brant) purchased $170,000 of these bonds on the open market for $191,000, a price based on an effective interest rate of 7 percent. The bond liability had a carrying amount on that date of $710,000. Assume Brant uses the equity method to account internally for its investment in Zack. a. & b. What consolidation entry would be required for these bonds on December 31, 2016 and December 31, 2018? (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your intermediate answers to nearest whole number.)
Several years ago Brant, Inc., sold $960,000 in bonds to the public. Annual cash interest of 9 percent ($86,400) was to be paid on this debt. The bonds were issued at a discount to yield 12 percent. At the beginning of 2019, Zack Corporation (a wholly owned subsidiary of Brant) purchased $120,000 of these bonds on the open market for $141,000, a price based on an effective interest rate of 7 percent. The bond liability had a carrying amount on that date of $820,000. Assume Brant uses the equity method to account internally for its investment in Zack. a. & b. What consolidation entry would be required for these bonds on December 31, 2019 and December 31, 2021? (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your intermediate calculations and final answers to nearest whole number.) No 1 2 Answer is complete but not entirely correct. Accounts Date December 31, 201 Bonds payable Interest income Investment in bonds…
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Fuzzy Monkey Technologies, Incorporated purchased as a long-term investment $150 million of 6% bonds, dated January 1, on January 1, 2024. Management intends to have the investment available for sale when circumstances warrant. When the company purchased the bonds, management elected to account for them under the fair value option. For bonds of similar risk and maturity the market yield was 8%. The price paid for the bonds was $133 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 $140 million. Required: 1. to 3. Prepare the relevant journal entries on the respective dates (record the interest at the effective rate). 4-a. At what amount will Fuzzy Monkey report its investment in the December 31, 2024, balance sheet? 4-b. Prepare the journal entry necessary to achieve this reporting objective. 5. How would Fuzzy Monkey’s 2024 statement of cash flows be affected by this…
Several years ago Brant, Inc., sold $900,000 in bonds to the public. Annual cash interest of 9 percent ($81,000) was to be paid on this debt. The bonds were issued at a discount to yield 12 percent. At the beginning of 2016, Zack Corporation (a wholly owned subsidiary of Brant) purchased $180,000 of these bonds on the open market for $201,000, a price based on an effective interest rate of 7 percent. The bond liability had a carrying amount on that date of $760,000. Assume Brant uses the equity method to account internally for its investment in Zack.a. What consolidation entry would be required for these bonds on December 31, 2016?b. What consolidation entry would be required for these bonds on December 31, 2018?
Tanner-UNF Corporation acquired as a long-term investment $180 million of 7.0% bonds, dated July 1, on July 1, 2024. Company management has the positive intent and ability to hold the bonds until maturity. The market interest rate (yield) was 9% for bonds of similar risk and maturity. Tanner-UNF paid $160.0 million for the bonds. The company will receive interest semiannually on June 30 and December 31. As a result of changing market conditions, the fair value of the bonds at December 31, 2024, was $160.0 million. Required: 1. & 2. Prepare the journal entry to record Tanner-UNF's investment in the bonds on July 1, 2024 and interest on December 31, 2024, a the effective (market) rate. 3. At what amount will Tanner-UNF report its investment in the December 31, 2024, balance sheet? 4. Suppose Moody's bond rating agency downgraded the risk rating of the bonds motivating Tanner-UNF to sell the investment on January 2, 2025, for $130.0 million. Prepare the journal entry to record the sale.…
Cotton Candy Company purchased $1,500,000 of 10% bonds of Caramel Company on January 1, 2024, paying $1,410,375. The bonds mature January 1, 2031; interest is payable each July 1 and January 1. The discount of $89,625 provides an effective yield of 11%. For the year ended December 31, 2024, Cotton Candy Companys income statement will report interest revenue from the Caramel Company bonds of
On January 1, 2024, Morrison Inc., a public company, purchased $600,000 of Pearl Corporation's five-year, 4% bonds for $627,660 when the market interest rate was 3%. Interest is received semi-annually on July 1 and January 1. Morrison's year end is December 31. Morrison intends to hold Pearl's bonds until January 1, 2029, the date the bonds mature. The bonds' fair value on December 31, 2024, was $620,000. Instructions Record the purchase of the bonds on January 1, 2024. Prepare the entry to record the receipt of interest on July 1, 2024. Prepare the adjusting entry required at December 31, 2024. Show the financial presentation of the bonds for Morrison on December 31, 2024. Prepare the entry to record the receipt of interest on January 1, 2025. Prepare the entry to record the receipt on maturity of the bonds on January 1, 2029. Assume the entry to record the last interest payment has been recorded.
Tanner-UNF Corporation acquired as a long-term investment $1 million of 10-year bonds on July 1, 2023. The purchase price of the bonds was $922,054. After receiving the first interest payment on December 31, 2023, the carrying value of the bonds was $925,106. The market price of the bonds on December 31, 2023, was $927,000. Assuming that Tanner - UNF intends to sell the bonds as soon as possible, how much will be reported as investment in bonds on Tanner - unf's balance sheet on a December 31st 2023?And in which section of the balance sheet will the investment appear?