Horngren's Accounting, The Financial Chapters, Student Value Edition (11th Edition)
Horngren's Accounting, The Financial Chapters, Student Value Edition (11th Edition)
11th Edition
ISBN: 9780133876352
Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
Publisher: PEARSON
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Chapter 15, Problem E15.9E
To determine

Concept introduction: Bond refers to a financial security which is issued by a business entity for raising funds for long-term. Bond generates return for the investors on a specified date and this return can be variable or fixed.

Requirement 1;

To prepare: Journal entries for the transactions of 2016.

Main solution:

Date Accounts Title& Explanation Debit Credit
Jan. 2, 2016 Long-term Investment –Held-to-Maturity $800000  
  Cash   $800000
  (For recording purchase of bond)    
       
June.30, 2016 Cash $16000  
  Interest Revenue   $16000
  (For recording interest on bond)    
       
Dec.31, 2016 Cash $16000  
  Interest Revenue   $16000
  (For recording interest on bond)    

To determine

Requirement 2;

To calculate: Amount of interest received each year from CocoCorp.

Main solution:

Amount of interest received each year from CocoCorp = $32000

To determine

Requirement 3;

To calculate: Amount of interest revenue recognized during 2016.

Main solution:

Amount of interest revenue recognized during 2016 = $32000

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Financial Accounting - Long-term Liabilities - Bonds; Author: Finance & Accounting Videos by Prof Coram;https://www.youtube.com/watch?v=_1fwsJIGMos;License: Standard Youtube License