On January 1, 2022, Sarasota and Lois Company purchased 12% bonds having a maturity valueof $324,000 for $348, 564.30. The bonds provide the bondholders with a 10% yield. They aredated January 1, 2022, and mature on January 1, 2027, with interest receivable on Deecember31 of each year. Sarasota and Lois Company uses the effective interest method to allocateunamortized discount or premium. The bonds are carried at FV - OCI. The fair value of the bondsat December 31 of each year - end is as follows: 2022 $346,000, 2023: $334,000. Prepare thejournal entries to record the interest received and recognition of fair value for 2022.

The bonds have been purchased at a premium as the purchase value is greater than the maturity value.…

Answered: sota and Lois Company purchased 12%…

FINANCIAL ACCOUNTING

10th Edition

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Author:Libby

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Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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sota and Lois Company purchased 12% bonds h 30. The bonds provide the bondholders with a nd mature on January 1, 2027, with interest rece and Lois Company uses the effective interest me remium. The bonds are carried at FV- OCI. The ear-end is as follows: 2022 $346.000. 2023: $31