Instructions On January 2, 2020, Mark Company acquired, as a held-to-maturity investment, bonds with a face value of $500,000 for $502,300, The bonds cary a stated interest rate of 12% and an effective yield of 10%. Interest is paid on June 30 and December 31, and the bonds mature on December 31, 2029 Required: Prepare the joumal entries necessary to record the purchase of the bonds and the first two semi-annual interest receipts using the straight-line method of amortization.
Q: tries for HTM Debt Securities— Effective Interest Method On July 1, 2020, West Company purchased…
A: d. Effect of investment:
Q: On January 1, 2019, PPP Company purchased as a long-term investment P5,000,000 face amount of SSS…
A: A bond is a debt security that is issued by large business entities and governments to borrow funds.…
Q: On January 1, 2021, Demeanor Company purchased bonds with face amount of P5,000,000 to be held as…
A: Bond is an investment security which provides a fixed interest income to the bondholders. The…
Q: January 1, 2020, Altaj Company acquires $400,000 of toothpaste Products, Inc., 9% bonds at a price…
A: Workings: Calculation of discount on amortization: Acquisition price = 350450 Bond value = 400000…
Q: On January 1,2020, Jerry Conpany acquired P6,000,000 of 12% face value bonds at P5,650,500 to be…
A: Annual interest payment =face value of bonds x rate of interest x year = P6,000,000 x 12% x 1 year =…
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: On July 1, 2020, West Company purchased for cash, three $10,000 bonds of North Corporation to yield…
A: Available for Sale (AFS): When investments are made in securities with an intention to make profit…
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 January 1, 2019, Mark Corporation purchased bonds with a face value of $500,000 for…
A: Each journal entry comprises details about a specific business deal, such as the date, the sum to be…
Q: Recording Entries for HTM Debt Securities— Effective Interest Method On July 1, 2020, West…
A: HTM Securities: When investments are made in securities with an intent to held until the maturity,…
Q: On January 1, 2020, the Widner Company acquired 12% bonds with a face value of $350,000 and…
A: Bonds refer to the financial instrument issued in the market by the company for the cash borrowed.…
Q: Chloe Glenn Company acquired P6,000,000, 5-year bonds with a stated rate of 10% on January 1, 2020.…
A:
Q: Teal Mountain Incorporated issued $0.62 million of 6.5%, 10-year bonds on July 1, 2019, at face…
A: Under ASPE, the bond payable is recorded at the face value and the interest is computed by applying…
Q: On January 1, 2019, Weaver Company purchased as held-to-maturity debt securities $500,000 face value…
A: The term "debt securities" can refer to a range of financial products that contain a commitment from…
Q: On January 1, 2020, Metlock Company acquires $110,000 of Spiderman Products, Inc., 9% bonds at a…
A: The question is based on the concept of Financial Accounting.
Q: On January 1, 2019, DB Company purchase 9% bonds in the face amount of P6,000,000. The bonds mature…
A: Unrealized gain on investments: A prospective profit that exists on paper as a consequence of…
Q: On January 1, 2021, Panama Company purchased bonds for yield 5,000,000 face amount 4,562,000 to be…
A: Amortization is an accounting method used to periodically decrease the book value of a debt or…
Q: uayside Limited acquired 6%, $ 100,000 (face value) bonds of Summerside Incorporated on January 1,…
A: Step 1 Journal is the Part of Book Keeping.
Q: On April 1, 2019, Red Company purchased as a trading security a P1,000,000 face value 8% bond for…
A: PLEASE LKE THE ANSERS YOUR RESPONSE MATTERS Red Company has purchased the Trading Security @ P…
Q: On March 31, 2019, Brodie Corporation acquired bonds with a par value of $400,000 for $422,800. The…
A:
Q: January 1, 2020, an investor company acquires $249,000 of the investee company’s 4% bonds at a price…
A: The effective interest method is an accounting standard used to amortize, or discount a bond. This…
Q: what amount should Red report as Unrealized gain or loss from trading securities? (Do not include…
A: Red Company has purchased the Trading Security @ P 920,000 + 12000 + 20000(1000000*8%*3/12)(Accrued…
Q: On January 1, 2019, PPP Company purchased as a long-term investment P5,000,000 face amount of SSS…
A: The interest method is an accounting technique that helps to amortize discounts or premiums on bond…
Q: On July 1, 2020, West Company purchased for cash, twelve $10,000 bonds of North Corporation at a…
A: Journal Entry: Journal entry has two effects for every transaction. The journal entry is passed…
Q: On January 1, 2020, Metlock Company acquires $ 110,000 of Spiderman Products, Inc., 9% bonds at a…
A:
Q: On January 1, 2019, Salt Mine Corporation purchased at par 8% bonds having a maturity value of…
A: Bonds: Bonds are long-term promissory notes that are issued by a company while borrowing money from…
Q: On January 1, 2020, Dagwood Company purchased at par 6% bonds having a maturity value of $300,000.…
A: No. Date Account Titles and Explanation Debit Credit a. January 1, 2020 Debt investment $300,000…
Q: "Oh January 1, 2019, TYP Company purchased P1,200,000, 14% bonds of PSY Company for P1,352,143, a…
A: Answer : Option d - Answer not given
Q: On January 1, 2020, Pronghorn Company acquires $270,000 of Spiderman Products, Inc., 9% bonds at a…
A: Given that the company follows straight line method of amortization, under this method discount on…
Q: January 1, 2021, an investor company acquires $470,000 of the investee company’s 7% bonds at a price…
A: Bonds – also known as fixed income instruments – are used by governments or companies to raise money…
Q: On January 1, 2019, Mark Corporation purchased bonds with a face value of $500,000 for $475,413.60.…
A: The exercise of recording trade and commerce for the first time in the books of accounts is known as…
Q: On April 1, 2019, Red Company purchased as a trading security a P1,000,000 face value 8% bond for…
A: Bonds can be defined the financial instrument in which is risk free investment avenue. It provides…
Q: On January 1, 2020, Phantom Company acquires $200,000 of Spiderman Products, Inc., 9% bonds at a…
A: The held-to-maturity debt investment account is classified as a long-term investment account. The…
Q: On January 1, 2021, Rare Bird Ltd. purchased 15% bonds dated January 1, 2021, with a face amount of…
A: Given in the question: Face Value = $22 million Face Value = $22,000,000 Coupon Rate = 15% Market…
Q: On January 1, 2021, for $18 million, Monument Company purchased 10 year, 10% bonds, dated January 1,…
A: Semiannually interest receipt = Face value of bonds x rate of interest x 6/12 months = $20,000,000 x…
Q: On August 1, 2018, Dambro Company acquired 1,200, $1,000, 9% bonds at 97 plus accrued interest. The…
A: A bond is an instrument of raising funds. It has a fixed interest rate which is the paid by the…
Q: rated issued $0.81 million of 7.5%, 10-year bonds on July 1, 2019, at face value. Interest is…
A: Journal Entries are passed in accordance to IFRS-9 and ASPE -3856.
Q: What is the interest income for 2020? a. P280,000 b. P400,000 c.P248,080 d. P354,400 53. What is…
A: “Since you have posted a question with many sub-parts, we will solve three sub-parts for you. To get…
Q: On May 1, 2021, Bramble Corp. purchased $1,580,000 of 12% bonds, interest payable on January 1 and…
A: Bonds are considered a financial instrument used to raise finance for the organization. It is also…
Q: On 1 January 2020, Maple Ltd. purchased $500,000 of Pine Ltd. 7% bonds. The bonds pay semi-annual…
A: A. Given Bond Value = $500000, Coupon Rate =7% p.a. , Yield Rate =…
Q: On January 1, 2019, Mark Corporation purchased bonds with a face value of $500,000 for $475,413.60.…
A: Prepare a schedule of bond investment interest income and discount amortization: Date Cash…
Q: On January 1, 2026, ABC purchased serial bonds (to be held by collecting contractual cash flows…
A:
Q: On January 1, 2019, Roosevelt Company purchased 12% bonds having a maturity value of $600,000 for…
A:
Q: Recording Entries for HTM Debt Securities— Effective Interest Method On July 1, 2020, West Company…
A: Income statements refers to those financial statements that shows the profitability of a business…
Q: On January 2, 2020, Mark Company acquired, as a held-to-maturity investment, bonds with a face value…
A: A bond is borrowing security issued by the company by signing a bond agreement in which terms and…
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 January 1, 2020, Pronghorn Company acquires $270,000 of Spiderman Products, Inc., 9% bonds at a…
A:
Q: On January 1, 2020, Metlock Company acquires $ 110,000 of Spiderman Products, Inc., 9% bonds at a…
A: The question is based on the concept of Financial Accounting.
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: Prepare the necessary journal entries to record the above How much is the investment in bonds on…
A: “Hey, since there are multiple requirements posted, we will answer first three requirements. If you…
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 1 images
- Held-to-Maturity Securities and Amortization of a Discount On January 1, 2019, Kelly Corporation acquired bonds with a face value of 500,000 for 483,841.79, a price that yields a 10% effective annual interest rate. The bonds carry a 9% stated rate of interest, pay interest semiannually on June 30 and December 31, are due December 31, 2022, and are being held to maturity Required: Prepare journal entries to record the purchase of the bonds and the first two interest receipts using the: 1. straight-line method of amortization 2. effective interest method of amortizationRefer 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.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 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.Investments On October 4, 2019, Collins Company purchased 100 bonds of Steph Company for 6,400 as a short-term investment in securities classified as available for sale. On December 31, 2019, the bonds had a fair value of 6,300, and on February 8, 2020, Collins sold the bonds for 6,700. Required: In journal entry form, prepare the spreadsheet entries to record these transactions for Collins Companys 2019 and 2020 statement of cash flows.Investment Premium Amortization Schedule On January 1, 2019, Lynch Company acquired 13% bonds with a face value of 50,000. The bonds pay interest on June 30 and December 31 and mature on December 31, 2021. Lynch paid 51,229.35, a price that yields a 12% effective annual interest rate. Required: 1. Record the purchase of the bonds. 2. Prepare an investment interest income and premium amortization schedule using the effective interest method. 3. Record the receipts of interest on June 30, 2019, and December 31, 2021.
- 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 amortizationRefer 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.