(Debt Investments) Presented below is information taken from a bond investment amortization schedule with related fair values provided. These bonds are classified as available-for-sale. 12/31/17 12/31/18 12/31/19 Amortized cost $491,150 $519,442 $550,000 Fair value 497,000 509,000 550,000 Instructions(a) Indicate whether the bonds were purchased at a discount or at a premium.(b) Prepare the adjusting entry to record the bonds at fair value at December 31, 2017. The Fair Value Adjustment account has a debit balance of $1,000 prior to adjustment.(c) Prepare the adjusting entry to record the bonds at fair value at December 31, 2018.
(Debt Investments) Presented below is information taken from a bond investment amortization schedule with related fair values provided. These bonds are classified as available-for-sale. 12/31/17 12/31/18 12/31/19 Amortized cost $491,150 $519,442 $550,000 Fair value 497,000 509,000 550,000 Instructions(a) Indicate whether the bonds were purchased at a discount or at a premium.(b) Prepare the adjusting entry to record the bonds at fair value at December 31, 2017. The Fair Value Adjustment account has a debit balance of $1,000 prior to adjustment.(c) Prepare the adjusting entry to record the bonds at fair value at December 31, 2018.
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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(Debt Investments) Presented below is information taken from a bond investment amortization schedule with related fair values provided. These bonds are classified as available-for-sale.
12/31/17 | 12/31/18 | 12/31/19 | |
Amortized cost | $491,150 | $519,442 | $550,000 |
Fair value | 497,000 | 509,000 | 550,000 |
Instructions
(a) Indicate whether the bonds were purchased at a discount or at a premium.
(b) Prepare the
(c) Prepare the adjusting entry to record the bonds at fair value at December 31, 2018.
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