alain Company purchased $800,000 of 8%bonds of alain Corporation on January 1,2015, at a discount, paying $ 738,2242. Thebonds mature January 1, 2020, and yield 10%;interest is payable each July 1 and January 1.Assume that Robinson Company sells itsinvestment on November 1, 2018, at 90 plusaccrued interest. a) Robinson records thisdiscount amortization as follows: b)Computation Gain/Loss on Sale of Bonds andJournal entry.

Amortization of bonds refers to the process in which the carrying value of the bond is adjusted with…

Answered: he that Robinson Company sells its ment…

he that Robinson Company sells its ment on November 1, 2018, at 90 plus ed interest. a) Robinson records this unt amortization as follows: b) utation Gain/Loss on Sale of Bonds and al entry.

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 5E

See similar textbooks

Related questions

Q: Swifty Company purchased, on January 1, 2020, as an available-for-sale security, $90,000 of the 7%,…

A: SOLUTION- JOURNAL ENTRY IS USED TO RECORD A BUSINESS TRANSACTION IN THE ACCOUNTING RECORDS OF A…

Q: On September 1, 2021, Howell Company purchased 600 of the P1,000 face value, 9% bonds of Ramsey,…

A: The bonds purchased for non trading are recorded as investment in the balance sheet. The difference…

Q: Carow Corporation purchased on January 1, 2020, as a held-to-maturity investment, $60,000 of the 8%,…

A: When effective interest method is used, the interest expenses are computed based on effective…

Q: PT ABC purchased Rp300.000 of 8%, 5-year bonds from PT DEF on January 1, 2018, with interest payable…

A: Half Year Opening Balance Interest Expense @ 3.5% Coupon Payment Amortized Premium Ending Balance…

Q: On June 30, 2019, ABC acquired a non-interest bearing, 3-year, P6,000,000 face value serial bonds…

A: Note means an instrument acknowledging the debt due from one company to another company with…

Q: On October 1, 2021, POGI Company purchased 4,000 of the P1,000 face amount, 10% bonds of GANDA…

A: Bonds are defined as the units of the corporate debt, which are issued through the companies as well…

Q: Kingbird Corporation purchased on January 1, 2020, as a held-to-maturity investment, $50,000 of the…

A: Introduction: Journals: Recording of a business transactions in a chronological order. First step in…

Q: On September 1, 2019, PT XYZ purchased 600 of the Rp1.000 face value, 9% bonds of PT DEF for…

A: Year Coupon @ 4.5% Present Value factor @4% Present Value Mar-20 27 0.962 25.96…

Q: On June 1, 2019, Garnett Company purchased as held for collection securities 8,000 of the P1,000…

A: A bond is a kind of debt financial instrument that is being issued by corporations and the…

Q: On October 1, 2020, Kikiam Company purchased as debt investments at fair value through profit or…

A: Attributable Cost It is the cost which is associated directly with an investment or cost center.

Q: On July 1, 2021, Dreeben Company acquired P600,000 (face value), 10%, P1,000 bonds at 99 plus…

A: As Given in the question Dreeben Company purchased P 600,000 (face value) at 10%, P 1,000 bonds at…

Q: Sandhill Company purchased $3400000 of 8%, 5-year bonds from Blue, Inc. on January 1, 2021, with…

A: Given, Sales price of bond is $3,490,000 Carrying value of bond is $3,497,440 The computation is…

Q: Garfield Company purchased, on January 1, 2020, as an avialable -for-sale-security, $80,000 of the…

A: Journal entries are prepared to record the financial and non financial transaction of the business…

Q: On January 1, 2019, Demeanor Company pure with face amount of P5,000,000 to be held as fir at…

A: The answer has been mentioned below.

Q: On November 1, 2021, Sheridan Company purchased Pina, Inc., 10-year, 9%, bonds with a face value of…

A: Discount on bonds = face value - purchase value = 850000 - 770000 = $80,000

Q: Carow SA purchased on January 1, 2019, as a held-for-collection investment, €50,000 of the 8%,…

A: A bond is regarded as a fixed income bearing instrument that is issued by a corporate or…

Q: An investor company purchased $716,000 of 4% bonds from the investee company on January 1, 2020,…

A: When the corporation buys securities with the intention to resell them or not hold them till…

Q: On September 1, 2019, PT ABC purchased 600 of the Rp1.000 face value, 9% bonds of PT DEF for…

A: Answer An amortized bond is one in which the principal (face value) on the debt is paid down…

Q: Carow SA purchased on January 1, 2019, as a held-for- collection investment, €50,000 of the 8%,…

A: A bond is a fixed pay instrument issued to represents to an advance made by a financial specialist…

Q: On January 1, 2020, Kevin Cosme acquired a P2,000,000, 10% bond for P2,159,708. The ongoing interest…

Q: On October 1, 2021, POGI company purchased 4000 of the P1000 face amount, 10% bonds of GANDA Company…

A: The carrying value of a bond means the net amount between the bond's face value plus any…

Q: Manda Company acquired P6,000,000 of Landoil 12% bonds on May 1, 2020 at 94 plus accrued interest to…

A: The question is based on the concept of Journal entries.

Q: 1.On July 1, 2018, TRES Company purchased an 8-yr, 12% bonds with a face value of ₱ 4,875,000 at 102…

A: Accrued interest on July 1, 2018 = Face value of bonds x rate of interest x no. of months / 12 = ₱…

Q: Swifty Company purchased, on January 1, 2020, as an available-for-sale security, $90,000 of the 7%,…

A: Journal Entry: Journal entry is the act of keeping records of transactions in an accounting journal.…

Q: What is the interest income for the year 2021?

A: The amount of interest against the acquired securities considered to be earned on the basis of time…

Q: On January 1, 2019, Dumaguete Company purchased bonds with face amount of P4,000,000 for P4,206,000.…

A: Initial recognition of bonds = P4, 206,000 Interest will be paid on face value

Q: On July 1, 2020, West Company purchased for cash, four $10,000 bonds of North Corporation at a…

A: Bond can be referred to as an instrument which is used by different companies for raising funds from…

Q: Blossom Company purchased $1300000 of 8%, 5-year bonds from Carlin, Inc. on January 1, 2021, with…

A: When the sale price of bonds is greater than the book value of the bonds, then it would result in…

Q: On J anuary 1, 2019, kelly Corporation acquired bonds wiili a face value of $500,000 for $483841.79,…

A: A journal entry is the technique through which a firm records every individual financial…

Q: On May 1, 2019, LAG Co. purchased a short-term P2,000,000 face value, 9% debt instruments for…

A: Given, Purchases = P 1,860,000 Face Value = P 2,000,000 Fair value = 98%

Q: On Jan. 1, 2021, an entity bought investment in bonds and classified it as an investment at…

A: Bonds are interest-paying securities that are issued by a corporation or the government to raise…

Q: Ramirez Company has a held-for-collection investment in the 6%, 20-year bonds of Soto Company. The…

A: GAAP - Generally Accepted Accounting Principles refer to a common set of accounting principles,…

Q: . On April 30, 2020, ABC acquired ar hvestment in bonds which has a face alue of P5,000,000 and pays…

A: Interest income is the amount received in the form in yield in case of bonds. Interest rate is…

Q: Carow Corporation purchased, as a held-for-collection investment, $60,000 of the 8%, 5-year bonds of…

A: No. Account Titles and explanation Debit Credit a. Investment - Held-to-maturity…

Q: Atif purchased on January 1, 2019, as a held-for-collection investment, OMR 75,000 of the 8%, 5-year…

Q: Blossom Company purchased $1180000 of 8%, 5-year bonds from Carlin, Inc. on January 1, 2021, with…

A: Bonds refers to the units of corporate debts which are issued by companies and also securitized…

Q: On May 1, 2021, Bramble Corp. purchased $1,580,000 of 12% bonds, interest payable on January 1 and…

A: Journal Entry: Journal entry is the act of keeping records of transactions in an accounting journal.…

Q: anuary 1, 2020, Splish Company purchased $300,000, 6% bonds of Cabana Co. for $313,128. The bonds…

A: Amortization is an accounting procedure that is used to reduce the market valuation of a loan or an…

Q: Wildhorse Company purchased $1290000 of 8%, 5-year bonds from Blossom, Inc. on January 1, 2021, with…

A: Workings: Using the effective interest method:

Q: On January 1, 2019, Perez Corporation issued 5,000 of its 5 year, P1,000 face value, 11% bonds dated…

A: GIVEN On January 1, 2019, Perez Corporation issued 5,000 of its 5 year, P1,000 face value, 11%…

Q: On October 1, 2021, Neon Company purchased a P2,000,000 face value 10% debt instrument paying a…

A: A profit and loss financial statement that illustrates a company's revenue and spending over a…

Q: On January 1, 2021, Carrots Corporation purchased, as held-for-collection investment, P60,000 of the…

A: Bonds can be defined as an investment security which provides a fixed return on the investment with…

Q: Cullumber Company purchased $3050000 of 9%, 5-year bonds from Vaughn, Inc. on January 1, 2021, with…

A: Bonds can be define as an instrument which most commonly used by corporate entities and government…

Q: Cash Interest Receivable Investment in TS Fair Value Adjustment--TS Investment in AFS Securities…

A: Bonds: It is also known as a fixed-income security, is a debt instrument created for the purpose of…

Q: On Jan. 1, 2021, an entity bought investment in bonds and classified it as an investment at…

A: Step 1 A financial asset is a non-physical asset whose value is derived from a contractual claim,…

Q: On January 1, 2019, Violet Corporation retired P5, 000,000 of bonds at P99. At the time of…

A: Given that, on January 1, 2019 Violet corporation bonds retired = P5000000 Total number of bonds =…

Q: On June 1, 2019, Garnett Company purchased as held for collection securities 8,000 of the P1,000…

A: Face value of the bond investment: 8,000 x P1,000 = P 8,000,000 Coupon rate: 8% p.a. or 4%…

Q: On July 1, 2020, West Company purchased for cash, three $10,000 bonds of North Corporation at a…

A: Step 1 Journal is the part of book keeping.

Q: Crane Company purchased $1190000 of 8%, 5-year bonds from Carlin, Inc. on January 1, 2021, with…

A: Sale value of bonds $12,25,900 Carrying value of bonds $12,30,500 Loss on sale of bonds…

Q: Tudor Company acquired $500,000 of Carr Corporation bonds for $487,706.69 on January 1, 2019. The…

Question

alain Company purchased $800,000 of 8%
bonds of alain Corporation on January 1,
2015, at a discount, paying $ 738,2242. The
bonds mature January 1, 2020, and yield 10%;
interest is payable each July 1 and January 1.
Assume that Robinson Company sells its
investment on November 1, 2018, at 90 plus
accrued interest. a) Robinson records this
discount amortization as follows: b)
Computation Gain/Loss on Sale of Bonds and
Journal entry.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

Step 2

Step 3

Step 4

Step by step

Solved in 4 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

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?
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.
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.
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