On January 1, 2017, Pearl Company purchased 12% bonds, having a maturity value of $284,000, for $305,531.40. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2017, and mature January 1, 2022, with interest received on January 1 of each year. Pearl Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified as available-for-sale category. The fair value of the bonds at December 31 of each year-end is as follows. 2017 $303,400 2018 $292,200 2019 (a) (b) $291,200 2020 2021 $293,200 $284,000 Prepare the journal entry at the date of the bond purchase. Prepare the journal entries to record the interest revenue and recognition of fair value for 2017. Prepare the journal entry to record the recognition of fair value for 2018
On January 1, 2017, Pearl Company purchased 12% bonds, having a maturity value of $284,000, for $305,531.40. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2017, and mature January 1, 2022, with interest received on January 1 of each year. Pearl Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified as available-for-sale category. The fair value of the bonds at December 31 of each year-end is as follows. 2017 $303,400 2018 $292,200 2019 (a) (b) $291,200 2020 2021 $293,200 $284,000 Prepare the journal entry at the date of the bond purchase. Prepare the journal entries to record the interest revenue and recognition of fair value for 2017. Prepare the journal entry to record the recognition of fair value for 2018
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
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