Swifty Company purchased, on January 1, 2020, as an available-for-sale security, $90,000 of the 7%, 5-year bonds of Chester Corporation for $82,999, which provides an 9% return. Prepare Swifty'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. (Assume a zero balance in the Fair Value Adjustment account.) The bonds have a year-end fair value of $85,500. Assume effective-interest amortization is used. (Round answers to O decimal places, eg. 1,225. Credit account titles are automatically indented when amount is entered. Do not indent manually.If o entry is required, select "No Entry" for the account titles and enter O for the amounts.) No. Account Titles and Explanation Debit Credit (a) (c)
Swifty Company purchased, on January 1, 2020, as an available-for-sale security, $90,000 of the 7%, 5-year bonds of Chester Corporation for $82,999, which provides an 9% return. Prepare Swifty'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. (Assume a zero balance in the Fair Value Adjustment account.) The bonds have a year-end fair value of $85,500. Assume effective-interest amortization is used. (Round answers to O decimal places, eg. 1,225. Credit account titles are automatically indented when amount is entered. Do not indent manually.If o entry is required, select "No Entry" for the account titles and enter O for the amounts.) No. Account Titles and Explanation Debit Credit (a) (c)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Swifty Company purchased, on January 1, 2020, as an available-for-sale security, $90,000 of the 7%, 5-year bonds of Chester
Corporation for $82,999, which provides an 9% return.
Prepare Swifty'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. (Assume a zero balance in the Fair Value Adjustment account.) The bonds have a year-end fair
value of $85,500. Assume effective-interest amortization is used. (Round answers to O decimal places, eg. 1,225. 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)
No. Account Titles and Explanation
Debit
Credit
(a)
(b)
(c)
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