C. Current Attempt in Progress The following Espresso Corporation transactions are for bonds that were purchased as a trading investment for the year ended December 31, 2021: Feb. 1 Purchased $228,000 of Leslye Corporation 3% bonds at 106 (this means 106% of maturity value). Interest is received semi-annually on August 1 and February 1. The bonds mature on February 1, 2023. Received interest on Leslye bonds. Sold $91,200 of the Leslye bonds at 102. Accrued interest on the remaining bonds. The fair value of the remaining bonds was 100 on this date. Aug. 1 Dec. 31 2 31 Show Transcribed Text Feb. 1 Aug. 1 ug. 2 Dec. 31 Trading Investments Cash Cash Interest Income Cash Realized Loss on Trading Investments Trading Investments Interest Receivable Interest Income J 241680 3420 93024 3648 1710 241680 3420 1711 96672 1710

C. Current Attempt in Progress The following Espresso Corporation transactions are for bonds that were purchased as a trading investment for the year ended December 31, 2021: Feb. 1 Purchased $228,000 of Leslye Corporation 3% bonds at 106 (this means 106% of maturity value). Interest is received semi-annually on August 1 and February 1. The bonds mature on February 1, 2023. Received interest on Leslye bonds. Sold $91,200 of the Leslye bonds at 102. Accrued interest on the remaining bonds. The fair value of the remaining bonds was 100 on this date. Aug. 1 Dec. 31 2 31 Show Transcribed Text Feb. 1 Aug. 1 ug. 2 Dec. 31 Trading Investments Cash Cash Interest Income Cash Realized Loss on Trading Investments Trading Investments Interest Receivable Interest Income J 241680 3420 93024 3648 1710 241680 3420 1711 96672 1710

Financial Accounting

14th Edition

ISBN:9781305088436

Author:Carl Warren, Jim Reeve, Jonathan Duchac

Publisher:Carl Warren, Jim Reeve, Jonathan Duchac

Chapter15: Investments And Fair Value Accounting

Section: Chapter Questions

Problem 4E

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Bats Corporation issued 800,000 of 12% face value bonds for 851,705.70. The bonds were dated and issued on April 1, 2019, are due March 31, 2023, and pay interest semiannually on September 30 and March 31. Bats sold the bonds to yield 10%. Required: 1. Prepare a bond interest expense and premium amortization schedule using the straight-line method. 2. Prepare a bond interest expense and premium amortization schedule using the effective interest method. 3. Prepare any 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. Assume the company retires the bonds on June 30, 2020, at 103 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
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