Presented below is an amortization schedule related to Ronaldo Company's 5-year, $100,000 bond with a 7% interest rate and a 5% yield, purchased on December 31, 2015, for $108,660. Interest Bond Premium Carrying Amount of Bonds Cash Date Received Revenue Amortization 12/31/15 $108,660 12/31/16 $7,000 $5,433 $1,567 107,093 12/31/17 7,000 5,354 1,646 105,447 12/31/18 7,000 5,272 1,728 103,719 12/31/19 7,000 5,186 1,814 101,905 12/31/20 7,000 5,095 1,905 100,000 The following schedule presents a comparison of the amortized cost and fair value of the bonds at year-end. 12/31/16 12/31/17 12/31/18 12/31/19 12/31/20 Amortized cost $107,093 $105,447 s103,719 $101,90s $100,000 Fair value 106,500 107,500 105,650 103,000 100,000 Instructions (a) Prepare the journal entry to record the purchase of these bonds on December 31, 2015, assuming the bonds are classified as held-for-collection investments. (b) Prepare the journal entry(ies) related to the held-for-collection bonds for 2016. (c) Prepare the journal entry(ies) related to the held-for-collection bonds for 2018. (d) Prepare the journal entry(ies) to record the purchase of these bonds, assuming they are classified as trading. (e) Prepare the journal entry(ies) related to the trading bonds for 2016. () Prepare the journal entry(ies) related to the trading bonds for 2018
Presented below is an amortization schedule related to Ronaldo Company's 5-year, $100,000 bond with a 7% interest rate and a 5% yield, purchased on December 31, 2015, for $108,660. Interest Bond Premium Carrying Amount of Bonds Cash Date Received Revenue Amortization 12/31/15 $108,660 12/31/16 $7,000 $5,433 $1,567 107,093 12/31/17 7,000 5,354 1,646 105,447 12/31/18 7,000 5,272 1,728 103,719 12/31/19 7,000 5,186 1,814 101,905 12/31/20 7,000 5,095 1,905 100,000 The following schedule presents a comparison of the amortized cost and fair value of the bonds at year-end. 12/31/16 12/31/17 12/31/18 12/31/19 12/31/20 Amortized cost $107,093 $105,447 s103,719 $101,90s $100,000 Fair value 106,500 107,500 105,650 103,000 100,000 Instructions (a) Prepare the journal entry to record the purchase of these bonds on December 31, 2015, assuming the bonds are classified as held-for-collection investments. (b) Prepare the journal entry(ies) related to the held-for-collection bonds for 2016. (c) Prepare the journal entry(ies) related to the held-for-collection bonds for 2018. (d) Prepare the journal entry(ies) to record the purchase of these bonds, assuming they are classified as trading. (e) Prepare the journal entry(ies) related to the trading bonds for 2016. () Prepare the journal entry(ies) related to the trading bonds for 2018
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 1RE
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Transcribed Image Text:Presented below is an amortization schedule related to Ronaldo Company's 5-year,
$100,000 bond with a 7% interest rate and a 5% yield, purchased on December 31,
2015, for $108,660.
Cash
Interest
Bond Premium Carrying Amount
Date
Received Revenue
Amortization
of Bonds
12/31/15
$108,660
12/31/16
$7,000
$5,433
$1,567
107,093
12/31/17
7,000
5,354
1,646
105,447
12/31/18
7,000
5,272
1,728
103,719
12/31/19
7,000
5,186
1,814
101,905
12/31/20 7,000
5,095
1,905
100,000
The following schedule presents a comparison of the amortized cost and fair value of
the bonds at year-end.
12/31/16
12/31/17
12/31/18
12/31/19
12/31/20
Amortized cost $107,093 $105,447 $103,719 $101,905 $100,000
Fair value
106,500
107,500
105,650
103,000
100,000
Instructions
(a) Prepare the journal entry to record the purchase of these bonds on December 31,
2015, assuming the bonds are classified as held-for-collection investments.
(b) Prepare the journal entry(jes) related to the held-for-collection bonds for 2016.
(c) Prepare the journal entry(ies) related to the held-for-collection bonds for 2018.
(d) Prepare the journal entry(ies) to record the purchase of these bonds, assuming they
are classified as trading.
(e) Prepare the journal entry(ies) related to the trading bonds for 2016.
(f) Prepare the journal entry(ies) related to the trading bonds for 2018
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