tries for HTM Debt Securities— Effective Interest Method On July 1, 2020, West Company purchased for cash, fifteen $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 held-to-maturity securities. The annual reporting period ends December 31. Assume the effective interest method of amortization of any discount or premium. d. Indicate the effects of this investment on the 2020 income statement and year-end balance sheet. Note: List accounts in alphabetical order.
Recording Entries for HTM Debt Securities— Effective Interest Method
On July 1, 2020, West Company purchased for cash, fifteen $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 held-to-maturity securities. The annual reporting period ends December 31. Assume the effective interest method of amortization of any discount or premium.
d. Indicate the effects of this investment on the 2020 income statement and year-end
Note: List accounts in alphabetical order.
| Income Statement | 2020 |
|---|---|
| Other Revenues and Gains | |
| Answer |
| Balance Sheet | December 31, 2020 |
|---|---|
| Assets | |
| Answer | |
| Answer |
e. Record the receipt of interest on January 1, 2021.
f. After the interest payment on July 1, 2021, two of the bonds were sold for $36,670 cash. Provide the required entries on July 1, 2021.
Note: List multiple debits or credits (when applicable) in alphabetical order.
Note: If a line in a
| Date | Account Name | Dr. | Cr. | |
|---|---|---|---|---|
| e. | Jan. 1, 2021 | Answer | Answer | |
| Answer | Answer | |||
| f. | Jul. 1, 2021 | Answer | Answer | |
| Answer | Answer | |||
| Answer | Answer | |||
| Jul. 1, 2021 | Answer | Answer | ||
| Answer | Answer | |||
| Answer | Answer | |||
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
