![Horngren's Financial & Managerial Accounting Plus Mylab Accounting With Pearson Etext -- Access Card Package (5th Edition) (miller-nobles Et Al., The Horngren Accounting Series)](https://www.bartleby.com/isbn_cover_images/9780134077345/9780134077345_largeCoverImage.gif)
Horngren's Financial & Managerial Accounting Plus Mylab Accounting With Pearson Etext -- Access Card Package (5th Edition) (miller-nobles Et Al., The Horngren Accounting Series)
5th Edition
ISBN: 9780134077345
Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 10, Problem 10.8E
1.
To determine
Hold-to-maturity Debt: These are the investment in debt securities, where the investor wishes to hold till the maturity. Since equity securities do not have fixed maturity date, these types of securities belongs to debt only. They are treated either as current assets or long-term assets.
To Journalize: The transaction of purchase of bond at face value by Company B during 2016.
2.
To determine
To Journalize: Journalize the transaction of disposition of bond at maturity with determination of the date.
Expert Solution & Answer
![Check Mark](/static/check-mark.png)
Want to see the full answer?
Check out a sample textbook solution![Blurred answer](/static/blurred-answer.jpg)
Students have asked these similar questions
Recording Bond Entries and Preparing an Amortization Schedule—Effective Interest Method, Premium
Mitchell Inc. issued 198, 6%, $1,000 bonds on January 1, 2020. The bonds pay cash interest semiannually each June 30, and December 31, and were issued to yield 5%. The bonds mature December 31, 2024, and the company uses the effective interest method to amortize bond discounts or premiums.
Required
a. Determine the selling price of the bonds. Round amount to the nearest whole dollar.
b. Prepare an amortization schedule for the full bond term.
c. Prepare journal entries on the following dates.
1. January 1, 2020, bond issuance.
2. June 30, 2020, interest payment.
3. December 31, 2020, interest payment.
kindly answer part e, f and g
The following transactions are taken from the records of the Elton Corporation. Prepare journal entries for the transactions for the following:
a. Bonds payable with a par value of $800,000, carrying a stated interest rate of 9% payable semiannually on March 1 and September 1, were issued on June 1, 2014, at 102.5 plus accrued interest. The bonds are dated March 1, 2014 and mature on March 1, 2024.
b. September 1 interest payment is made. (Bond premium amortization is recorded only at year end.)
c. Year-end (December 31) accrued interest on bonds payable is recorded and the bond premium is amortized using the straight-line method.
d. March 1 interest payment is made.
e. Bonds with a par value of $350,000 are purchased at 101 plus accrued interest on August 1, 2015, and retired. (Bond premium amortization is recorded only at year end.)
f. September 1 interest payment is made.
g. Year-end (December 31) accrued interest on bonds payable is recorded and the…
Accounting for debt investments
On January 1, 2018, the Chaucer’s Restaurant decides to invest in Lake Turner bonds. The bonds mature on December 31, 2023, and pay interest on June 30 and December 31 at 4% annually. The market rate of interest was 4% on January 1, 2018, so the $90,000 maturity value bonds sold for face value. Chaucer’s intends to hold the bonds until December 31, 2023.
Requirements
Journalize the transactions related to Chaucer’s investment in Lake Turner bonds during 2018.
In what category would Chaucer’s report the investment on the December 31, 2018, balance sheet?
Chapter 10 Solutions
Horngren's Financial & Managerial Accounting Plus Mylab Accounting With Pearson Etext -- Access Card Package (5th Edition) (miller-nobles Et Al., The Horngren Accounting Series)
Ch. 10 - Prob. 1QCCh. 10 - Which of the following investments is most likely...Ch. 10 - If Intervale Railway invests 100,000 in 5% bonds...Ch. 10 - Prob. 4QCCh. 10 - Prob. 5QCCh. 10 - Prob. 6QCCh. 10 - Prob. 7QCCh. 10 - Harvard Co. purchased a trading investment on...Ch. 10 - Prob. 9QCCh. 10 - Prob. 10QC
Ch. 10 - What is a debt security?Ch. 10 - Prob. 2RQCh. 10 - Prob. 3RQCh. 10 - Briefly describe the five specific types of debt...Ch. 10 - How is the purchase of a held-to-maturity debt...Ch. 10 - Prob. 6RQCh. 10 - What method is used for investments in equity...Ch. 10 - What method is used for investments in equity...Ch. 10 - What adjustment must be made at the end of the...Ch. 10 - Where on the financial statements is an unrealized...Ch. 10 - Prob. 11RQCh. 10 - Prob. 12RQCh. 10 - Prob. 13RQCh. 10 - What does the rate of return on total assets...Ch. 10 - Identifying why companies invest and classifying...Ch. 10 - Prob. 10.2SECh. 10 - Prob. 10.3SECh. 10 - Accounting for equity method On January 1, 2016,...Ch. 10 - Accounting for trading investments On February 1,...Ch. 10 - Prob. 10.6SECh. 10 - Computing rate of return on total assets Kabra's...Ch. 10 - Prob. 10.8ECh. 10 - Prob. 10.9ECh. 10 - Accounting for bond investments Otter Creek Co....Ch. 10 - Accounting for stock investments Dollar Bill...Ch. 10 - Prob. 10.12ECh. 10 - Prob. 10.13ECh. 10 - Accounting for stock investments Suppose that on...Ch. 10 - Prob. 10.15ECh. 10 - Prob. 10.16ECh. 10 - A Accounting for bond investments Suppose Jenner...Ch. 10 - Prob. 10.18APCh. 10 - Accounting for stock investments The beginning...Ch. 10 - Accounting for bond investments Suppose Ritter...Ch. 10 - Classifying and accounting for stock investments...Ch. 10 - Accounting for stock investments The beginning...Ch. 10 - Prob. 10.23CPCh. 10 - Prob. 10.1CTEICh. 10 - Wild Adventure conducts tours of wildlife reserves...Ch. 10 - Prob. 10.1CTFSCCh. 10 - Prob. 10.1CTTPCh. 10 - In 150 words or fewer, explain the difference...
Knowledge Booster
Similar questions
- Volunteer Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July 1, 2018 and received $540,000. Interest is payable annually. The premium is amortized using the straightline method. Prepare journal entries for the following transactions. A. July 1, 2018: entry to record issuing the bonds B. June 30, 2019: entry to record payment of interest to bondholders C. June 30, 2019: entry to record amortization of premium D. June 30, 2020: entry to record payment of interest to bondholders E. June 30, 2020: entry to record amortization of premiumarrow_forwardAggies Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July 1, 2018, and received $540,000. Interest is payable semi-annually. The premium is amortized using the straight-line method. Prepare journal entries for the following transactions. A. July 1, 2018: entry to record issuing the bonds B. Dec. 31, 2018: entry to record payment of interest to bondholders C. Dec. 31, 2018: entry to record amortization of premiumarrow_forwardInstructions Chart of Accounts On February 1, 2020, Aggie Corporation sold its investment in Smith Corporation bonds for $12,500. The bonds have a face CHART OF ACCOUNTS value of $12,000 and a stated interest rate of 10%. The market value of the bonds on December 31, 2019 was $12,300. Aggie Corporation Required: General Ledger Prepare the journal entries to record the sale of the bonds and the adjustments of the unrealized gain or loss. ASSETS REVENUE 111 Cash 411 Sales Revenue 113 Investment in Trading Securities 431 Interest Income 114 Investment in Available-for-Sale Securities 441 Gain on Sale of Available-for-Sale General Journal 117 Interest Receivable Securities 119 Allowance for Change in Fair Value of Investment 121 Accounts Receivable EXPENSES Prepare the journal entries to record the sale of the bonds and the adjustments of the unrealized gain or loss on February 1, 2020. 500 Cost of Goods Sold 141 Inventory 152 Prepaid Insurance 511 Insurance Expense General Journal…arrow_forward
- Completing a Bond Amortization Table (Effective Interest Rate) MacBride Enterprises sold $200,000 of bonds on December 31, 2018. A portion of the amortization table appears below. Period CashPayment(Credit) Interest Expense(Debit) Premium onBonds Payable(Debit) Premium on BondsPayable Balance(Credit) Bond PayableCarrying Value(Credit) At issue $6,457 $206,457 06/30/19 $9,000 $8,465 $535 5,922 205,922 12/31/19 9,000 8,443 557 5,365 205,365 06/30/20 9,000 8,420 580 4,785 204,785 12/31/20 ? ? ? ? ? Required: 1. Indicate the stated annual interest rate on these bonds.% 2. Calculate the effective annual interest rate on these bonds. (Note: Round to the nearest 0.1%.)%arrow_forwardRecording Bond Entries and Preparing an Amortization Schedule—Effective Interest Method, Discount, Interest Accrual Mitchell Inc. issued 128, 6%, $1,000 bonds on January 1, 2020. The bonds pay cash interest semiannually each July 1, and January 1, and were issued to yield 7%. The bonds mature January 1, 2023, and the company uses the effective interest method to amortize bond discounts or premiums. Required a. Determine the selling price of the bonds. Round amount to the nearest dollar. b. Prepare an amortization schedule for the full bond term. c. Prepare journal entries on the following dates. 1. January 1, 2020, bond issuance. 2. July 1, 2020, interest payment. 3. December 31, 2020, interest accrual. 4. January 1, 2021, interest payment.arrow_forwardSuppose Donahue Brothers purchases $750,000 of 6.5% annual bonds of McPhee Corporation at face value on January 1, 2024. These bonds pay interest on June 30 and December 31 each year. They mature on December 31, 2033 Donahue intends to hold the McPhee bond investment until maturity Read the requirements Requirement 1. Journalize Donahue Brothers' transactions related to the bonds for 2024 (Record debits first, then credits Select the explanation on the last line of the journal entry table) Begin by journalizing Donahue Brothers' investment on January 1, 2024 Date Accounts and Explanation 2024 Jan 1 GETD Next, journalize the receipt of cash interest on June 30, 2024 Accounts and Explanation Date 2024 Jun 30 Journalize the receipt of cash interest on December 31, 2024 Accounts and Explanation Date 2024 Dec 31 Debit Accounts and Explanation Debit Debit Credit Debit Credit Requirement 2. Journalize the entry required on the McPhee bonds maturity date (Assume the last interest paymen has…arrow_forward
- Use the financial statement effects template to record the accounts and amounts for the following four transactions involving investments in marketable debt securities classified as available-for-sale securities. Assume that these transactions occur in 2016 (before the new rules for securities went into effect).a. Loudder Inc. purchases 5,000 bonds with a face value of $1,000 per bond. The bonds are purchased at par for cash and pay interest at a semi-annual rate of 4%.b. Loudder receives semi-annual cash interest of $200,000.c. Year-end fair value of the bonds is $978 per bond.d. Shortly after year-end, Loudder sells all 5,000 bonds for $970 per bond.Use negative signs with answers, if appropriate.arrow_forwardAccounting for debt investments Advance & Co. owns vast amounts of corporate bonds. Suppose Advance buys 51,100,000 of FermaCo bonds at face value on January 2, 2018. The FermaCo bonds pay interest at the annual rate of 3% on June 30 and December 31 and mature on December 31, 2037. Advance intends to hold the investment until maturity Requirements Journalize any required 2018 entries for the bond investment. How much cash interest will Advance receive each year from FermaCo? How much interest revenue will Advance report during 2018 on this bond investment?arrow_forwardAnalyzing and Reporting Financial Statement Effects of Bond Transactions On January 1, 2016, Trueman Corp. issued $350,000 of 20-year, 11% bonds for $323,669, yielding a market (yield) rate of 12%. Interest is payable semiannually on June 30 and December 31. Required a. Confirm the bond issue price. b. Prepare journal entries to record the bond issuance, semiannual interest payment and discount amortization on June 30, 2016, and semiannual interest payment and discount amortization on December 31, 2016. Use the effective interest rate method. c. Post the journal entries from part b to their respective T-accounts. d. Trueman elected to report these bonds in its financial statements at fair value. On December 31, 2016, these bonds were listed in the bond market at a price of 101 (or 101% of par value). What entry is required to adjust the reported value of these bonds to fair value? e. Prepare a table summarizing the effect of these bonds on earnings for 2016. Confirm Bond Price Journal…arrow_forward
- please answer in detail with all work thanks The company X acquired a bond on 1/1/2022 AND with a maturity date of 1/1/ 2025 for a face value of 530,000 with a stated rate of 10 % and a marker rate ot 12% . Payments are received at the end of each year. Prepare the amortisation schedule of the bond and record the necessary journal entries from the bondholder point of viewarrow_forwardAccounting for debt investments League Up & Co. owns vast amounts of corporate bonds. Suppose League Up buys $900,000 of CocoCorp bonds at face value on January 2, 2018. The CocoCorp bonds pay interest at the annual rate of 8% on June 30 and December 31 and mature on December 31, 2022. League Up intends to hold the investment until maturity. Requirements How would the bond investment be classified on League up’s December 31, 2018, balance sheet? Journalize the following on League Up’s books: a. Receipt of final interest payment, on December 31, 2022. b. Disposition of the investment at maturity on December 31, 2022.arrow_forwardQuestion: Saberhagen Company sold $3,500,000, 8%, 10-year bonds on January 1, 2020. The bonds were dated January 1, 2020, and pay interest annually on January 1. Saberhagen Company uses the straight-line method to amortize bond premium or discount. (a) Prepare all the necessary journal entries to record the issuance of the bonds and bond interest expense for 2017, assuming that the bonds sold at 104. Amortization $14,000 (b) Prepare journal entries as in part (a) assuming that the bonds sold at 98. Amortization $7,000 (c) Show balance sheet presentation for the bonds at December 31, 2017, for both the requirements in (a) and (b). Premium on bonds payable $3,626,000 D0iscount on bonds payable $3,437,000arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax CollegeFinancial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage LearningFinancial AccountingAccountingISBN:9781305088436Author:Carl Warren, Jim Reeve, Jonathan DuchacPublisher:Cengage Learning
- Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
![Text book image](https://www.bartleby.com/isbn_cover_images/9781305654174/9781305654174_smallCoverImage.gif)
Financial Accounting: The Impact on Decision Make...
Accounting
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Cengage Learning
![Text book image](https://www.bartleby.com/isbn_cover_images/9781305088436/9781305088436_smallCoverImage.gif)
Financial Accounting
Accounting
ISBN:9781305088436
Author:Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:Cengage Learning
![Text book image](https://www.bartleby.com/isbn_cover_images/9781337690881/9781337690881_smallCoverImage.gif)
Cornerstones of Financial Accounting
Accounting
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Cengage Learning