Recording Entries for HTM Debt Securities— Effective Interest Method On July 1, 2020, West Company purchased for cash, sixteen $10,000 bonds of North Corporation to yield 10%. The bonds pay 9% interest, payable on a semiannual basis each July 1 and January 1, and mature on July 1, 2023. The bonds are classified as held-to-maturity securities. The annual reporting period ends December 31. Assume the effective interest method of amortization of any discount or premium. Amortization Schedule Journal Entries in 2020 Financial Statement Presentation Journal Entries in 2021 a. Prepare a bond amortization schedule for 2020 and 2021 using the effective interest method. Note: Round each amount entered into the schedule to the nearest whole dollar. Use the rounded amount for later calculations in the schedule. Date Stated Interest Market Interest Discount Amortization Bond Amortized Cost Jul. 1, 2020 Answer Jan. 1, 2021 Answer Answer Answer Answer Jul. 1, 2021 Answer Answer Answer Answer b. Record the entry for the purchase of the bonds by West Company on July 1, 2020. c. Record the adjusting entry by West Company on December 31, 2020. The fair value of the bonds at December 31, 2020, was $162,000. Note: List multiple debits or credits (when applicable) in alphabetical order. Note: If a line in a journal entry isn't required for the transaction, select "N/A" as the account names and leave the Dr. and Cr. answers blank (zero). Date Account Name Dr. Cr. b. Jul. 1, 2020 c. Dec. 31, 2020 d. Indicate the effects of this investment on the 2020 income statement and year-end balance sheet. Note: List accounts in alphabetical order. Income Statement 2020 Other Revenues and Gains ? ? Balance Sheet December 31, 2020 Assets ? ? ? ? e. Record the receipt of interest on January 1, 2021. f. After the interest payment on July 1, 2021, two of the bonds were sold for $38,600 cash. Provide the required entries on July 1, 2021. Note: List multiple debits or credits (when applicable) in alphabetical order. Note: If a line in a journal entry isn't required for the transaction, select "N/A" as the account names and leave the Dr. and Cr. answers blank (zero). Date Account Name Dr. Cr. e. Jan. 1, 2021 f. Jul. 1, 2021 To record receipt of interest. Jul. 1, 2021 To record sale of bonds.

Recording Entries for HTM Debt Securities— Effective Interest Method On July 1, 2020, West Company purchased for cash, sixteen $10,000 bonds of North Corporation to yield 10%. The bonds pay 9% interest, payable on a semiannual basis each July 1 and January 1, and mature on July 1, 2023. The bonds are classified as held-to-maturity securities. The annual reporting period ends December 31. Assume the effective interest method of amortization of any discount or premium. Amortization Schedule Journal Entries in 2020 Financial Statement Presentation Journal Entries in 2021 a. Prepare a bond amortization schedule for 2020 and 2021 using the effective interest method. Note: Round each amount entered into the schedule to the nearest whole dollar. Use the rounded amount for later calculations in the schedule. Date Stated Interest Market Interest Discount Amortization Bond Amortized Cost Jul. 1, 2020 Answer Jan. 1, 2021 Answer Answer Answer Answer Jul. 1, 2021 Answer Answer Answer Answer b. Record the entry for the purchase of the bonds by West Company on July 1, 2020. c. Record the adjusting entry by West Company on December 31, 2020. The fair value of the bonds at December 31, 2020, was $162,000. Note: List multiple debits or credits (when applicable) in alphabetical order. Note: If a line in a journal entry isn't required for the transaction, select "N/A" as the account names and leave the Dr. and Cr. answers blank (zero). Date Account Name Dr. Cr. b. Jul. 1, 2020 c. Dec. 31, 2020 d. Indicate the effects of this investment on the 2020 income statement and year-end balance sheet. Note: List accounts in alphabetical order. Income Statement 2020 Other Revenues and Gains ? ? Balance Sheet December 31, 2020 Assets ? ? ? ? e. Record the receipt of interest on January 1, 2021. f. After the interest payment on July 1, 2021, two of the bonds were sold for $38,600 cash. Provide the required entries on July 1, 2021. Note: List multiple debits or credits (when applicable) in alphabetical order. Note: If a line in a journal entry isn't required for the transaction, select "N/A" as the account names and leave the Dr. and Cr. answers blank (zero). Date Account Name Dr. Cr. e. Jan. 1, 2021 f. Jul. 1, 2021 To record receipt of interest. Jul. 1, 2021 To record sale of bonds.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter9: Long-term Liabilities

Section: Chapter Questions

Problem 76E

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PLEASE ANSWER D THROUGH F

Recording Entries for HTM Debt Securities— Effective Interest Method

On July 1, 2020, West Company purchased for cash, sixteen $10,000 bonds of North Corporation to yield 10%. The bonds pay 9% interest, payable on a semiannual basis each July 1 and January 1, and mature on July 1, 2023. The bonds are classified as held-to-maturity securities. The annual reporting period ends December 31. Assume the effective interest method of amortization of any discount or premium.

Amortization Schedule
Journal Entries in 2020
Financial Statement Presentation
Journal Entries in 2021

a. Prepare a bond amortization schedule for 2020 and 2021 using the effective interest method.
Note: Round each amount entered into the schedule to the nearest whole dollar. Use the rounded amount for later calculations in the schedule.

Date	Stated Interest	Market Interest	Discount Amortization	Bond Amortized Cost
Jul. 1, 2020				Answer
Jan. 1, 2021	Answer	Answer	Answer	Answer
Jul. 1, 2021	Answer	Answer	Answer	Answer

b. Record the entry for the purchase of the bonds by West Company on July 1, 2020.

c. Record the adjusting entry by West Company on December 31, 2020. The fair value of the bonds at December 31, 2020, was $162,000.

Note: List multiple debits or credits (when applicable) in alphabetical order.

Note: If a line in a journal entry isn't required for the transaction, select "N/A" as the account names and leave the Dr. and Cr. answers blank (zero).

	Date	Account Name	Dr.	Cr.
b.	Jul. 1, 2020

c.	Dec. 31, 2020

d. Indicate the effects of this investment on the 2020 income statement and year-end balance sheet.

Note: List accounts in alphabetical order.

Income Statement	2020
Other Revenues and Gains
?	?

Balance Sheet	December 31, 2020
Assets
?	?
?	?

e. Record the receipt of interest on January 1, 2021.

f. After the interest payment on July 1, 2021, two of the bonds were sold for $38,600 cash. Provide the required entries on July 1, 2021.

Note: List multiple debits or credits (when applicable) in alphabetical order.

Note: If a line in a journal entry isn't required for the transaction, select "N/A" as the account names and leave the Dr. and Cr. answers blank (zero).

	Date	Account Name
e.	Jan. 1, 2021

f.	Jul. 1, 2021


		To record receipt of interest.
	Jul. 1, 2021


		To record sale of bonds.

Recording Entries for HTM Debt Securities- Effective Interest Method
On July 1, 2020, West Company purchased for cash, sixteen $10,000 bonds of North Corporation to yield 10%. The bonds pay 9% interest, payable on a semiannual basis each July 1 and January 1, and mature on July 1, 2023. The bonds are
classified as held-to-maturity securities. The annual reporting period ends December 31. Assume the effective interest method of amortization of any discount or premium.
Amortization Schedule
Journal Entries in 2020
Financial Statement Presentation
Journal Entries in 2021
d. Indicate the effects of this investment on the 2020 income statement and year-end balance sheet.
Note: List accounts in alphabetical order.
Income Statement
2020
Other Revenues and Gains
2$
Balance Sheet
December 31, 2020
Assets

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