Prepare the journal entry to record the sale 1/1/28TotalBridgeport Limited has two debt securities classified as FV-OCI. For the Chan bonds, assume the amortization table noted below.Assume further that the Anacomp bonds were purchased at par value (therefore there is no premium or discount) and that noimpairment exists.Date1/1/237/1/231/1/247/1/241/1/257/1/251/1/267/1/261/1/277/1/271/1/283,280Bonds Purchased to Yield 11%CashInterest Bond DiscountReceived Income Amortization$3,280 $4,0003,2803,2803,2803,2803,2803,2803,2803,2803,2804,448$32,800 $42,0724,0404,0814,1254,1724,2214,2734,3274,3854,4481,168Investments in BondsChan Corporation 8% bondsAnacomp Corporation 10% bondsTotal portfolioPrevious fair value adjustment balanceFair value adjustment-Cr.$9,272$7207608018458929419931,0471.1051,168FV-OCI Investment PortfolioDecember 31, 2023AmortizedCost of Bonds$72,72873,44874,20875,00975,85476,74677,68778,68079,72780,832AmortizedCost$74,208216,000$290,208 $280,20082.00082,000FairValueUnrealizedGain (Loss)$84,200$9,992196,000 (20,000)(10,008)-0-$(10,008)Assume that Bridgeport sold the Chan bonds on July 1, 2024, for $70,000, at which time they had an amortized cost of $75,009 (afteradjusting for discount amortization of $801). Assume further that the fair value of the Anacomp bonds at December 31, 2024, is$211,000. There was no other activity in the investment portfolio between July 1 and December 31, 2024. Prepare the journal entry to record the sale. (Credit account titles are automatically indented when the amount is entered. Do notindent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries beforecredit entries.)Date Account Titles and ExplanationJuly 1/24July 1/24July 1/24(To revalue the investment to fair value)(To recognize the sale)(To reclassify the accumulated unrealized gain or loss)DebitCredit

Investment - A purchase made with the intention of creating income or capital growth is known as an…

Bridgeport Limited has two debt securities classified as FV-OCI. For the Chan bonds, assume the amortization table noted below. Assume further that the Anacomp bonds were purchased at par value (therefore there is no premium or discount) and that no impairment exists. Bonds Purchased to Yield 11% Interest Bond Discount Amortization Income Cash Date Received 1/1/23 7/1/23 $3,280 $4,000 1/1/24 3,280 4,040 $720 760 Amortized Cost of Bonds $72,728 73,448 74,208

Bridgeport Limited has two debt securities classified as FV-OCI. For the Chan bonds, assume the amortization table noted below. Assume further that the Anacomp bonds were purchased at par value (therefore there is no premium or discount) and that no impairment exists. Bonds Purchased to Yield 11% Interest Bond Discount Amortization Income Cash Date Received 1/1/23 7/1/23 $3,280 $4,000 1/1/24 3,280 4,040 $720 760 Amortized Cost of Bonds $72,728 73,448 74,208

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 7MCQ

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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.
This is a variation of E 12–1 focusing on available-for-sale securities.]Tanner-UNF Corporation acquired as a long-term investment $240 million of 6% bonds, dated July 1, on July1, 2018. The market interest rate (yield) was 8% for bonds of similar risk and maturity. Tanner-UNF paid $200million for the bonds. The company will receive interest semiannually on June 30 and December 31. Companymanagement has classified the bonds as available-for-sale investments. As a result of changing market conditions,the fair value of the bonds at December 31, 2018, was $210 million.Required:1. Prepare the journal entry to record Tanner-UNF’s investment in the bonds on July 1, 2018.2. Prepare the journal entries by Tanner-UNF to record interest on December 31, 2018, at the effective (market)rate.
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◦4. On January 1, 20x1, an entity issues 9%, 3-year, P3,000,000 bonds at a price that reflects a yield rate of 14%. ◦Requirement: ◦Compute for the discount or premium on the bonds on January 1, 20x1.
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1. On January 1, 20x1, an entity issues bonds with face amount of P5,000,000 for P5,200,000. The bonds mature on December 31, 20x3 and pay annual interest of 12%. The bonds can be converted into 10,000 ordinary shares of the entity with par value per share of P200. On January 1, 20x1, the bonds are selling at 101 without the conversion feature. The effective interest rate on the bonds is 11.59%. All of the bonds are converted into ordinary shares on January 1, 20x3. Requirement: Provide the entries to record the following: a.) issuance of the convertible bonds. b.) conversion of the bonds.
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