Blue Cells can contain:Discount Cash Premium Interest payable Par Interest expense Discount on bond payableYes Bonds payable No Loss on redemption Gain on redemptin Cash Interest payable Interest receivable Notes payable Gain on restructuring Loss on restructuring Discount on Note payable Premium on Note payable Bad debt expense Allowance for bad debts B.12345On February 1, 2013, Fiori repurchased $60,000 of the bonds at the call price.Assume that the unamortized balance in the Discount on Bonds Payableimmediately prior to purchase is $3,360. Check your computation of the gain orloss.RefAccount TitlesDebitCredit123 4514

RefAccount titlesDebitCredit Bonds payable $60,000 Discount on Bonds$3,360…

Answered: B. 12345 On February 1, 2013, Fiori…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 5RE

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Parilo Company acquired 170,000 of Makofske Co., 5% bonds on May 1, 2016, at their face amount. Interest is paid semiannually on May 1 and November 1. On November 1, 2016, Parilo Company sold 50,000 of the bonds for 96. Journalize entries to record the following: a. The initial acquisition of the bonds on May 1. b. The semiannual interest received on November 1. c. The sale of the bonds on November 1. d. The accrual of 1,000 interest on December 31, 2016.
During 2021, Anthony Company purchased debt securities as a long-term investment and classified them as trading. All securities were purchased at par value. Pertinent data are as follows: The net holding gain or loss included in Anthonys income statement for the year should be: a. 0 b. 3,000 gain c. 9,000 loss d. 12,000 loss
Refer 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.
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.
Transfer between Categories On December 31, 2018, Leslie Company held an investment in bonds of Kaufmann Company which it categorized as being held to maturity. At that time, the 8%, 100,000 face value bonds had a carrying value of 107,023.56 and were being amortized using the effective interest method based on a market rate of 7%. Interest on these bonds is paid annually each December 31. On December 31, 2019, after recording the interest earned, Leslie decided to reclassify the Kaufmann bonds to its available-for-sale category in anticipation of a major restructuring. At that time, the ending quoted market price for the bonds was 105,000. Required: Prepare the journal entries on December 31, 2019, to record the interest earned and the reclassification.
On January 1, 2019, Brewster Company issued 2,000 of its 5-year, 1,000 face value, 11% bonds dated January 1 at an effective annual interest rate (yield) of 9%. Brewster uses the effective interest method of amortization. On December 31, 2023, Brewster extinguished the 2,000 bonds early through acquisition in the open market for 1,980,000. On July 1, 2022, Brewster issued 5,000 of its 6-year, 1,000 face value, 10% convertible bonds dated July 1 at an effective annual interest rate (yield) of 12%. The bonds are convertible at the option of the investor into Brewsters common stock at a ratio of 10 shares of common stock for each bond. Brewster uses the effective interest method of amortization. On July 1, 2023, an investor in Brewsters convertible bonds tendered 1,500 bonds for conversion into 15,000 shares of Brewsters common stock, which had a market value of 105 per share at the date of the conversion. Required: 1. Using the information about Brewster, answer the following questions: a. Were the 11% bonds issued at par, at a discount, or at a premium? Why? b. Is the amount of interest expense for the 11% bonds using the effective interest method of amortization higher in the first or second year of the life of the bond issue? Why? 2. Using the information about Brewster, explain the following: a. How is a gain or loss on early extinguishment of debt determined? Does the early extinguishment of the 11% bonds result in a gain or loss? Why? b. How does Brewster report the early extinguishment of the 11% bonds on the 2023 income statement? 3. Based on the information provided about Brewster, answer the following questions: a. Does recording the conversion of the 10% convertible bonds into common stock under the book value method affect net income? What is the rationale for the book value method? b. Does recording the conversion of the 10% convertible bonds into common stock under the market value method affect net income? What is the rationale for the market value method?
Refer to the information in RE 13-3. Assume that on December 31, 2019, Wolfpack received interest on the Todd Corporation bonds. Wolfpack uses the straight-line method to amortize premiums and discounts. Prepare the December 31 journal entry to record the receipt of the interest. On July 1, 2019, Wolfpack Corporation purchases securities which it intends to buy and sell frequently. These securities consisted of todd Corporation 10%, 5-year bonds with a face value of 20,000 which were purchased for 18,500. Prepare the july 1 journal entry to record the purchase of these trading securities.
Cagney Company sold $248,000 of bonds on January 1, 2024. A portion of the amortization table follows. Period CashPayment(Credit) InterestExpense(Debit) Discounton BondsPayable(Credit) Discounton BondsPayableBalance CarryingValue At issue $8,000 $240,000 06/30/24 $12,000 $12,800 $800 7,200 240,800 12/31/24 12,000 12,800 800 6,400 241,600 06/30/25 ? ? ? ? ? Required: 1. Determine the stated interest rate on these bonds. Round your answer to the nearest whole number.fill in the blank 1 % 2. Calculate the interest expense and the discount amortization for the interest period ending on June 30, 2025. Interest expense $fill in the blank 2 Discount amortization $fill in the blank 3 3. Calculate the liability balance shown on a balance sheet after the interest payment is recorded on June 30, 2025.$fill in the blank 4
Rell Corporation reports under IFRS No. 9. Rell has an investment in Tirish, Inc. bonds that Rell accounts for atamortized cost, given that the bonds pay only interest and principal and Rell’s business purpose is to hold the bondsto maturity. Rell purchased the bonds for €10,000,000. As of December 31, 2018, Rell calculates €750,000 ofcredit losses expected for default events occurring during 2019 and €450,000 of credit losses expected for defaultevents occurring after 2019. Required:1. Assume the Tirish bonds have not had a significant increase in credit risk. Prepare the journal entry to recordany impairment loss as of December 31, 2018.2. Assume the Tirish bonds have had a significant increase in credit risk. Prepare the journal entry to record anyimpairment loss as of December 31, 2018.3. Assume the Tirish bonds have not had a significant increase in credit risk, and that as of December 31, 2019,Rell calculates €650,000 of credit losses expected for default events occurring during…
On April 30, 2015, Company acquired 10%, P100,000 bonds dated January 1, 2021 at 102. If the purchase price excludes interest, how much is the initial carrying amount of the investment? If the purchase price includes interest, how much is the initial carrying amount of the investment?
On November 1, 2015, Journeyman, LLC purchased 900 of the $1,000 face value, 9% bonds of Celebration Incorporated, for $948,000, including accrued interest of $13,500. The bonds matured on January 1, 2017, and interest was paid on March 1 and September 1. If Journeyman uses the straight-line method of amortization and the bonds are classified as available-for-sale, how should the net carrying value of the bonds be shown on Journeyman’s December 31, 2015 balance sheet?
On October 1, 2006, Brick purchased 100 of the $1,000 face value, 8% bonds of Ice, Inc., for $117,000, including accrued interest of $2,000. The bonds, which mature on January 1, 2013, pay interest semiannually on January 1 and July 1. Brick used the straight-line method of amortization and appropriately recorded the bonds as available-for-sale. On Brick's December 31, 2008 balance sheet, the carrying value of the bonds is Group of answer choices $113,600. $112,000 $109,600. $110,880.

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Discount		Cash
Premium		Interest payable
Par		Interest expense
		Discount on bond payable
Yes		Bonds payable
No		Loss on redemption
		Gain on redemptin

Cash
Interest payable
Interest receivable
Notes payable
Gain on restructuring
Loss on restructuring
Discount on Note payable
Premium on Note payable
Bad debt expense
Allowance for bad debts

B. 12345 On February 1, 2013, Fiori repurchased $60,000 of the bonds at the call price. Assume that the unamortized balance in the Discount on Bonds Payable immediately prior to purchase is $3,360. Check your computation of the gain or loss. Ref Account Titles Debit Credit 123 45 14