Answer complete question with working: answer in text form please (without image), Note: .Every entry should have narration please (c)(d)(e)Your answer is partially correct.Prepare the journal entries to record the semiannual interest on July 1, 2025, and December 31, 2025.If the fair value of Aguirre bonds is $402,077 on December 31, 2026, prepare the necessary adjusting entry. (Assumethe fair value adjustment balance on December 31, 2025, is a debit of $3,226.)Prepare the journal entry to record the sale of the bonds on January 1, 2027.(List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Donot indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Roundanswers to 0 decimal places, e.g. 1,225. Record journal entries in the order presented in the problem.)ALLUMII Frues and explanativiiDEVILJuly 1, 2025Dec. 31, 2025:Dec. 31,2026 #Jan 1, 2027 #CashDebt InvestmentsInterest RevenueInterest ReceivableDebt InvestmentsInterest RevenueUnrealized Holding Gain or Loss - Equityterest RevenueFair Value AdjustmentCashLoss on Sale of InvestmentsDebt Investments215002401215002545695340007715021DI CUIL On January 1, 2025, Splish Company purchased $430,000, 10% bonds of Aguirre Co. for $398,350. The bonds were purchased toyield 12% interest. Interest is payable semiannually on July 1 and January 1. The bonds mature on January 1, 2030. Splish Companyuses the effective-interest method to amortize discount or premium. On January 1, 2027, Splish Company sold the bonds for$400,077 after receiving interest to meet its liquidity needs.

Tradeable assets or financial agreements between parties are referred to as financial instruments.…

On January 1, 2025, Splish Company purchased $430,000, 10% bonds of Aguirre Co. for $398,350. The bonds were purchased to yield 12% interest. Interest is payable semiannually on July 1 and January 1. The bonds mature on January 1, 2030. Splish Company uses the effective-interest method to amortize discount or premium. On January 1, 2027, Splish Company sold the bonds for $400,077 after receiving interest to meet its liquidity needs.

On January 1, 2025, Splish Company purchased $430,000, 10% bonds of Aguirre Co. for $398,350. The bonds were purchased to yield 12% interest. Interest is payable semiannually on July 1 and January 1. The bonds mature on January 1, 2030. Splish Company uses the effective-interest method to amortize discount or premium. On January 1, 2027, Splish Company sold the bonds for $400,077 after receiving interest to meet its liquidity needs.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 1MC

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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?
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