Presented below is an amortization schedule related to Pearl Company's 5-year, $140,000 bondwith a 7% interest rate and a 5% yield, purchased on December 31, 2015, for $152,123.Cash InterestDate Received Revenue12/31/1512/31/16 $9,800 $7,606 $2,19412/31/17 9,80012/31/18 9,80012/31/19 9,800 7,260 2,54012/31/20 9,800 7,134 2,666Amortized costBondPremiumAmortizationFair value7,496 2,3042,4197,381CarryingAmountof Bonds$152,123149,929147,625145,206142,666The following schedule presents a comparison of the amortized cost and fair value of the bondsat year-end:140,00012/31/16$149,929 $147,625$145,206$142,666$149,300 $149,800 $147,000 $143,800 $140,00012/31/17 12/31/1812/31/1912/31/20$140,000 (a) Prepare the journal entry to record the purchase of these bonds on December 31, 2015,assuming the bonds are classified as held-to-maturity securities.(b) Prepare the journal entry related to the held-to-maturity bonds for 2016.(c) Prepare the journal entry related to the held-to-maturity bonds for 2018.(d) Prepare the journal entry to record the purchase of these bonds, assuming they areclassified as available-for-sale.(e) Prepare the journal entries related to the available-for-sale bonds for 2016.(f) Prepare the journal entries related to the available-for-sale bonds for 2018.

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Presented below is an amortization schedule related to Pearl Company's 5-year, $140,000 bond with a 7% interest rate and a 5% yield, purchased on December 31, 2015, for $152,123. Date 12/31/15 Cash Interest Received Revenue 12/31/16 $9,800 $7,606 $2,194 12/31/17 9,800 7,496 2,304 12/31/18 9,800 7,381 2,419 12/31/19 9,800 12/31/20 9,800 Amortized cost Fair value 7,260 Bond Premium Amortization 7,134 2,666 12/31/16 2,540 $149,929 Carrying Amount of Bonds The following schedule presents a comparison of the amortized cost and fair value of the bonds at year-end: $152,123 $149,300 $149,800 149,929 147,625 145,206 142,666 140,000 12/31/17 12/31/18 12/31/19 $147,625 $145,206 $142,666 $147,000 $143,800 12/31/20 $140,000 $140,000

Presented below is an amortization schedule related to Pearl Company's 5-year, $140,000 bond with a 7% interest rate and a 5% yield, purchased on December 31, 2015, for $152,123. Date 12/31/15 Cash Interest Received Revenue 12/31/16 $9,800 $7,606 $2,194 12/31/17 9,800 7,496 2,304 12/31/18 9,800 7,381 2,419 12/31/19 9,800 12/31/20 9,800 Amortized cost Fair value 7,260 Bond Premium Amortization 7,134 2,666 12/31/16 2,540 $149,929 Carrying Amount of Bonds The following schedule presents a comparison of the amortized cost and fair value of the bonds at year-end: $152,123 $149,300 $149,800 149,929 147,625 145,206 142,666 140,000 12/31/17 12/31/18 12/31/19 $147,625 $145,206 $142,666 $147,000 $143,800 12/31/20 $140,000 $140,000

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter3: Income Sources

Section: Chapter Questions

Problem 91IIP

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