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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.  d. Indicate the effects of this investment on the 2020 income statement and year-end balance sheet. Note: List accounts in alphabetical order

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.  d. Indicate the effects of this investment on the 2020 income statement and year-end balance sheet. Note: List accounts in alphabetical order

Cornerstones of Financial Accounting
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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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. 

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

Note: List accounts in alphabetical order.

 

Cash Interest Receivable Investment in TS Fair Value Adjustment--TS Investment in AFS Securities Fair Value Adjustment--AFS Investment in HTM Securities Investment in Stock Fair Value Adjustment--Equity Securities Fair Value Adjustment--Fair Value Option Allowance for Credit Losses Accumulated Other Comprehensive Income Unrealized Gain or Loss--OCI Unrealized Gain or Loss--Income Dividend Revenue Interest Revenue Investment Income Loss on Impairment Recovery of Loss on Impairment Loss on Sale of Investment Gain on Sale of Investment N/A
Transcribed Image Text:Cash Interest Receivable Investment in TS Fair Value Adjustment--TS Investment in AFS Securities Fair Value Adjustment--AFS Investment in HTM Securities Investment in Stock Fair Value Adjustment--Equity Securities Fair Value Adjustment--Fair Value Option Allowance for Credit Losses Accumulated Other Comprehensive Income Unrealized Gain or Loss--OCI Unrealized Gain or Loss--Income Dividend Revenue Interest Revenue Investment Income Loss on Impairment Recovery of Loss on Impairment Loss on Sale of Investment Gain on Sale of Investment N/A
Recording Entries for HTM Debt Securities- Effective Interest Method On July 1, 2020, West Company purchased for cash, sixteen $10,000 bonds of North Corporation to yield 10%. The bonds pay 9% interest, payable on a semiannual basis each July 1 and January 1, and mature on July 1, 2023. The bonds are classified as held-to-maturity securities. The annual reporting period ends December 31. Assume the effective interest method of amortization of any discount or premium. Amortization Schedule Journal Entries in 2020 Financial Statement Presentation Journal Entries in 2021 d. Indicate the effects of this investment on the 2020 income statement and year-end balance sheet. Note: List accounts in alphabetical order. Income Statement 2020 Other Revenues and Gains Balance Sheet December 31, 2020 Assets 2$
Transcribed Image Text:Recording Entries for HTM Debt Securities- Effective Interest Method On July 1, 2020, West Company purchased for cash, sixteen $10,000 bonds of North Corporation to yield 10%. The bonds pay 9% interest, payable on a semiannual basis each July 1 and January 1, and mature on July 1, 2023. The bonds are classified as held-to-maturity securities. The annual reporting period ends December 31. Assume the effective interest method of amortization of any discount or premium. Amortization Schedule Journal Entries in 2020 Financial Statement Presentation Journal Entries in 2021 d. Indicate the effects of this investment on the 2020 income statement and year-end balance sheet. Note: List accounts in alphabetical order. Income Statement 2020 Other Revenues and Gains Balance Sheet December 31, 2020 Assets 2$
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