Journal entries required on the date of acquisition and at the end of the first year after acquisition. Given information: Company K purchased bonds 8% coupon rate Par value of $3,500,000 on January 1 The market rate of interest 10% Company K purchase the bonds for $3,023,042 The maturity period of 12 years The fair value of bonds is $3,000,000

Question

Keyser Company acquired $3,514,000 face value, 9% bonds as an available-for-sale investment on January 1 of the current year when the market rate of interest was 11%. Interest is paid annually each December 31. Keyser purchased the bonds, which mature in 12 years, for $3,057,717. Keyser amortizes the discount using the effective interest rate method. The fair value of the bonds at the end of the year is $3,010,000. Prepare the journal entries required on the date of acquisition and at the end of the first year after acquisition. (Record debits first, then credits. Exclude explanations from any journal entries.) Prepare the journal entry required on the date of acquisition. Аccount January 1

Answer 1

Question

Chapter 16, Problem 16.2BE

To determine

Journal entries required on the date of acquisition and at the end of the first year after acquisition.

Given information:

Company K purchased bonds 8% coupon rate

Par value of $3,500,000 on January 1

The market rate of interest 10%

Company K purchase the bonds for $3,023,042

The maturity period of 12 years

The fair value of bonds is $3,000,000

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