On January 1, 2020, Hummer Company purchased 5% bonds, havinga maturity value of $500,000, for $428,938. The bonds provide the bondholders with a 7% yield. They are dated January 1, 2020, and mature January 1, 2030, with interest receivable June 30 and December 31 of each year. Hummer Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified as available for sale. The fair value of the bonds at December 31 of each year end as follows: 2020: $430,000 2021: 425,000 2022:  420,000 2023: 450,000 2024: 470,000 (a) Prepare the journal entry at the date of the bond purchase.(b) Prepare the journal entries to record the interest received and recognition of fair value for 2020.(c) Prepare the journal entry to record the recognition of fair value for 2021.

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

A: Introduction Bonds issued with discount: Bonds are financial instrument which represents company’s…

Q: On January 2, 2021, Santos Company invested in a 4-year, 10% bond with face value of P6,000,000 in…

A: Financial statements refer to the written form of a statement of a company that depicts its…

Q: On January 1, 2020, Splish Company purchased 5% bonds, having a maturity value of $ 440,000 for $…

A: The question is based on the concept of Financial Accounting.

Q: On July 1, 2022, RED TV Company purchased 1,000 of the P1000 face value, 8% bonds for P910,000 plus…

A: It has been given that the bond is held for trading activities. Hence at year-end, the investment is…

Q: On July 1, 2020, Shake Corporation issued its 10%, 7-year bonds with one detachable warrant attached…

A: solution : the issued instrument is a compound financial instrument We shall identify the financial…

Q: On January 1, 2020, Splish Company purchased 12% bonds, having a maturity value of $450,000.00, for…

A: Journal is the book of original entry in which all the transactions of the business are recorded…

Q: Prepare the journal entry at the date of the bond purchase. (b)   Prepare the journal entries to…

A: Year Cash flow PVF @10% PV of Cash flow 2020      37,200 0.909      33,818.18 2021      37,200…

Q: On January 1, 2020, Marin Company purchased 6% bonds, having a maturity value of $550,000 for…

A: When the business model for the investment is to earn periodic income and capital gain, the…

Q: On January 1, 2020, Bonita Company purchased 12% bonds, having a maturity value of $320,000 for…

A: There are two methods of amortizing the premium or discount of bonds that are issued at a price…

Q: 20, Teal Company purchased 9% bonds having a maturity value of $370,000, for $400,342.96. The bonds…

A: The amount of interest expense, interest payment, and discount or premium amortization of a bond in…

Q: On January 1, 2020, Sage Company purchased  11% bonds, having a maturity value of $ 301,000 for $…

A: Bond purchased: In order to obtain money from investors who are prepared to lend them money for a…

Q: On January 1, 2020, Kingbird, Inc. purchased 11% bonds having a maturity value of $541,000 for…

A: The following journal entries are passed to show the investment in bonds.

Q: On January 1, 2020, Marigold Company sold  12% bonds having a maturity value of $ 400,000 for $…

A: The bonds are issued at premium when market rate is lower than the coupon rate of bonds.

Q: On January 1, 2020, RED Company purchased 12% bonds with face amount of P5,000,000 for P5,500,000…

A: Investments can be done in various assets or securities. Investment in bonds is done to earn…

Q: On January 1, 2020, Hole Company purchased 600 of $1,000 face value, 8% bonds of Lid Corp., for…

A: Given, Face value = $600,000 Issue price = $553,670   Discount on bonds payable = $600,000 -…

Q: On January 1, 2020, Splish Company purchased 12% bonds, having a maturity value of $450,000.00, for…

A: A bondholder refers to an individual who is an investor or the owner of debt securities which are…

Q: On January 1, 2020, Lucas Company purchased P1,200,000, 14% bonds of Andres Company for P1,381,934,…

A: Ending balance of Bond Investment = Beginning Balance + Interest Accrued at Effective rate -…

Q: On April 1, 2020, Seminole Company sold 15,000 of its 11%, 15-year, $1,000 face value bonds at 97.…

A: Since we only answer up to 3 sub-parts, we’ll answer the first three. Please resubmit the question…

Q: (a) Prepare the journal entry at the date of the bond issuance. (Round answer to 0 decimal places,…

A: Introduction: The effective interest technique is a standard for amortizing or discounting bonds.…

Q: On April 1, 2020, Waterway Company sold  17,100 of its  12%,  15-year, $1,000 face value bonds at…

A: Working Notes: 1. Calculate the discount on bonds payable as shown below:Discount on bonds payable =…

Q: On January 1, 2020, Oriole Company purchased 12% bonds, having a maturity value of $ 310,000 for $…

A: Bonds- Bonds are those monetary securities that are issued by banks, governments, companies so as to…

Q: On January 1, 2020, Oriole Company purchased 6% bonds, having a maturity value of $620,000 for…

A: Solution A Bond represents a loan to company or government in return of this company pay a fixed…

Q: On January 1, 2020, Lucas Company purchased P1,200,000, 14% bonds of Andres Company for P1,381,934,…

A: When bond of other entity is purchased as an investment, it can be reported on the balance sheet…

Q: On January 1, 2020, Sweet Company purchased  12% bonds having a maturity value of $ 270,000, for $…

A: The bonds can be purchased by company as investment, on premium or discount depending on the market…

Q: On January 1, 2020, RED Company purchased 12% bonds with face amount of ₱5,000,000 for ₱5,500,000…

A: The question is multiple choice question. On January 1, 2020, RED Company purchased 12% bonds with…

Q: On January 1, 2020, Windsor Company purchased 10% bonds having a maturity value of $340,000, for…

A: The journal entries are prepared to keep the record of day to day transactions of the business.

Q: On January 1, 2022, Isabel Company purchased bonds with face amount of P8,000,000 for P7,679,000 to…

A: The question is based on the concept of Financial Instruments. Financial Assets are investment…

Q: On January 1, 2020, Stellar Company purchased 12% bonds, having a maturity value of $325,000 for…

A:

Q: On January 1, 2020, Garland Company purchased bonds with a face amount of P8,000,000 for P7,679,000…

A: Investment is recognized at fair value and that value of the investment is increased by the interest…

Q: On April 1, 2020, Cat Company sold 12,000 of its ₱1,000 11%, 5-year face value bonds at 96. The…

A: Total discount on bonds issue = Face value of bonds x (100- issue price)/100 = ₱12,000,000 x (100 -…

Q: On January 1, 2020, Teal Company purchased 9% bonds having a maturity value of $370,000, for…

A: Interest receivable = face value of investment x  interest rate = 370,000 x 9% = $33300

Q: On December 31, 2019, Wintergreen, Inc, issued $150,000 of 7 percent, 10-year bonds at a price of…

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

Q: On January 1, 2020, Sage Company purchased  11% bonds, having a maturity value of $ 301,000 for $…

A: The question is based on the concept of Financial Accounting.

Q: On January 1, 2020, Aspin Company purchased $1,200,000, 14% bonds of Bulldog Company for $1,381,934,…

A: If the financial asset is measured at amortized cost, on the subsequent reporting date, the…

Q: On January 1, 2020, RED Company purchased 12% bonds with face amount of ₱5,000,000 for ₱5,500,000…

A: Interest income is described as the income which individual or an investor receives on the amount of…

Q: On April 1, 2020 Everjoy Company purchased $80,000 of Miller Corporation's 6% bonds at a purchase…

A: The carrying value of bonds payable is calculated after making adjustment for amortized discount or…

Q: On January 1, 2023, Baker Company purchased, as an investment, 5% bonds, having a maturity value of…

A: The Baker Co. purchased 5% bonds at discount of 11,600 [150,000-138,400].  The…

Q: On January 1, 2020, Monty Company purchased 12% bonds, having a maturity value of $310,000 for…

A: a. Prepare the journal entry at the date of the bond purchase. b. Prepare the journal entries to…

Q: On December 1, 2017, Cone Company issued its 9%, $450,000 face value bonds for $520,000, plus…

A: Number of bonds=Total valueIssue price=$450,000$100=4,500

Q: On January 1, 2020, Stellar Company purchased 12% bonds, having a maturity value of $325,000 for…

A: The question is based on the concept of Financial Accounting.

Q: On January 1, 2018, OCEANIC Company purchased 12% bonds, having a maturity value of P800,000, for…

A: Date of Purchase of Bonds= 01-01-2018 Maturity Value= P800000 Purchase price= P860652 Transaction…

Q: On January 1, 2020, Coronado Company purchased 13% bonds, having a maturity value of $279,000 for…

A: SOLUTION - A journal entry records a business transaction in the accounting system for an…

Q: On January 1, 2020, Hummer Company purchased 5% bonds, havinga maturity value of $500,000, for…

A: a. Journal entry at the date of the bond purchase:

Q: Prepare the journal entry to record the interest revenue and the amortization at December 31, 2020.…

A: Solution:- Preparation of journal entry as follows under:- Working notes:- Interest Revenue for 2020…

Q: On January 1, 2020, Cheyenne Company purchased 5% bonds, having a maturity value of $570,000 for…

A:

Q: On January 1, 2020, Hi and Lois Company purchased 12% bonds, having a maturity value of $300,000 for…

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

Q: On January 1, 2020, Teal Company purchased 9% bonds having a maturity value of $370,000, for…

A: Increase in assets should be debited and decrease in assets should be credited.

Q: On January 1, 2020, Lucas Company purchased P1,200,000, 14% bonds of Andres Company for P1,381,934,…

A: Financial asset held for earning contractual cash flow and to held the asset till maturity, is…

Q: On January 1, 2020, Hummer Company purchased 7% bonds, having a maturity value of $500,000, for…

A: 7% bond purchased, maturity value - $500,000, price - $570,000 Yield on the bond- 5% Purchased on –…

Q: On January 1, 2020, Swity Company sold 11% bonds having a maturity value of $700,000 for $726,535,…

A: Interest Expense = Opening Carrying Amount * 10% Premium Amortized = Cash Paid - Interest Expense

Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.