What should be reported as interest revenue for 2026?
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INVESTMENT AT AMORTIZED COST
CASE III: On January 1, 2026, ABC purchased 9% bonds with a face amount of P4M to yield 10%. The bonds are dated January 1, 2026, 2024, mature on December 31, 2035 and pay interest annually on December 31. The entity used the interest method.
What should be reported as interest revenue for 2026?
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- 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.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.Wilbury Corporation issued 1 million of 13.5% bonds for 985,071.68. The bonds are dated and issued October 1, 2019, are due September 30, 2020, and pay interest semiannually on March 31 and September 30. Assume an effective yield rate of 14%. Required: 1. Prepare a bond interest expense and discount amortization schedule using the straight-line method. 2. Prepare a bond interest expense and discount amortization schedule using the effective interest method. 3. Prepare adjusting entries for the end of the fiscal year December 31, 2019, using the: a. straight-line method of amortization b. effective interest method of amortization 4. If income before interest and income taxes of 30% in 2020 is 500,000, compute net income under each alternative. 5. Assume the company retired the bonds on June 30, 2020, at 98 plus accrued interest. Prepare the journal entries to record the bond retirement using the: a. straight line method of amortization b. effective interest method of amortization 6. Compute the companys times interest earned (pretax operating income divided by interest expense) for 2020 under each alternative.
- Volunteer Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July 1, 2018 and received $540,000. Interest is payable annually. The premium is amortized using the straightline method. Prepare journal entries for the following transactions. A. July 1, 2018: entry to record issuing the bonds B. June 30, 2019: entry to record payment of interest to bondholders C. June 30, 2019: entry to record amortization of premium D. June 30, 2020: entry to record payment of interest to bondholders E. June 30, 2020: entry to record amortization of premiumRefer 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.INVESTMENT AT AMORTIZED COST CASE I: On July 1, 2026, ABC purchased 5,000 of the P1,000 face amount, 8% bonds to yield 10% per annum. The bonds, which mature on July 1, 2031, pay interest semiannually on January 1 and July 1. The interest method of amortization is used. What is the carrying amount of the bond investment on December 31, 2026.
- On January 1, 2026, ABC purchased 9% bonds with a face amount of P4M to yield 10%. The bonds are dated January 1, 2026, 2024, mature on December 31, 2035 and pay interest annually on December 31. The entity used the interest method. What should be reported as interest revenue for 2026?On July 1, 2019, YYY Company paid P1,198,000 of 10% 20-year bonds with a face amount of P1,000,000. Interest is paid on June 30 and December 31. The bonds were purchased to yield 8%. The effective interest method is used to recognize interest income from this long-term investment. What is the carrying amount of the investment in bonds on December 31, 2019?(C) On April 30,2020, ABC Corp. purchased bonds with a face value of P1,400,000 and interest rate of 9% to be paid annually every Dec. 31 until the end of 2024. It paid P1,360,000 plus accrued interest plus transaction fee of P10,000. What is the journal entry to record the purchase if ABC accounted it as a FA-FV-PL? Use Accrued Interest Receivable in your answer. You may use parenthetical solutions. In the google form, provide the total cash outflow relating to the acquisition. IDL On Jan. 1.2021 ARC.nurcbased bonds for then of both
- (C) On April 30,2020, ABC Corp. purchased bonds with a face value of P1,400,000 and interest rate of 9% to be paid annually every Dec. 31 until the end of 2024. It paid P1,360,000 plus accrued interest plus transaction fee of P10,000. What is the journal entry to record the purchase if ABC accounted it as a FA-FV-PL? Use Accrued Interest Receivable in your answer. You may use parenthetical solutions. In the google form, provide the total cash outflow relating to the acquisition.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.…INVESTMENT AT AMORTIZED COST CASE V: On March 1, 2026, ABC purchased a 12% P3M face amount of bond, issue for P2,700,000 excluding accrued interest to be held as financial asset at amortized cost. The date of the bonds is February 1, 2026 and the interest is payable semiannually on February 1 and August 1. The bonds mature annually at the rate of P1M on February 1, 2027 and every February 1 thereafter. Compute the following assuming bond outstanding balance is used to amortized any premium or discount: Initial amount of the investment Carrying value of the investment at the end of 2026. Interest income for the year 2027. Carrying value of the investment at the end of 2027.