Corporate Financial Accounting
14th Edition
ISBN: 9781305653535
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Textbook Question
Chapter D, Problem D.2EX
Entries for investment in bonds, interest, and sale of bonds
Parilo Company acquired $170,000 of Makofske Co., 5% bonds on May 1. 20Y5, at their face amount. Interest is paid semiannually on May 1 and November 1. On November 1, 20Y5, Parilo sold $50,000 of the bonds for 96.
A. The initial acquisition of the bends on May 1.
B. The semiannual interest received on November 1.
C. The sale of the bonds on November 1.
D. The accrual of $1,000 interest on December 31, 20YS.
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Parilo Company acquired 170,000 of Makofske Co., 5% bonds on May 1, 2016, at their face amount. Interest is paid semiannually on May 1 and November 1. On November 1, 2016, Parilo Company sold 50,000 of the bonds for 96. Journalize entries to record the following: a. The initial acquisition of the bonds on May 1. b. The semiannual interest received on November 1. c. The sale of the bonds on November 1. d. The accrual of 1,000 interest on December 31, 2016.arrow_forwardTransfer between Categories On December 31, 2018, Leslie Company held an investment in bonds of Kaufmann Company which it categorized as being held to maturity. At that time, the 8%, 100,000 face value bonds had a carrying value of 107,023.56 and were being amortized using the effective interest method based on a market rate of 7%. Interest on these bonds is paid annually each December 31. On December 31, 2019, after recording the interest earned, Leslie decided to reclassify the Kaufmann bonds to its available-for-sale category in anticipation of a major restructuring. At that time, the ending quoted market price for the bonds was 105,000. Required: Prepare the journal entries on December 31, 2019, to record the interest earned and the reclassification.arrow_forwardREDEMPTION OF BONDS ISSUED AT FACE VALUE Levesque Lumber Co. issued 800,000 in bonds at face value 10 years ago and has paid semiannual interest payments through the years. (a) Assume the bonds are redeemed at face value. (b) Assume that 80,000 of the bonds are redeemed at 104. (c) Assume that 80,000 of the bonds are redeemed at 96. Prepare journal entries to record (a), (b), and (c).arrow_forward
- REDEMPTION OF BONDS ISSUED AT A PREMIUM Brighton Unlimited sold bonds at a premium for 630,000 (premium of 30,000) eight years ago. (a) The corporation redeems 60,000 of this issue at 98. The unamortized premium is 600. (b) The corporation redeems 90,000 of this issue at 102. The unamortized premium is 900. Prepare journal entries to record the redemption in (a) and (b).arrow_forwardBelow is select information from two, independent companies. Additional information includes: On January 1, Company A issued a 5-year $1,500,000 bond with at 6% stated rate. Interest is paid semiannually and the bond was sold at 105.5055 to yield a market rate of 4.75%. On January 1, Company B sold $1,500,000 of common stock and paid dividends of $75,000. A. Prepare an income statement for each company (ignore taxes) B. Explain why the net income amounts are different, paying particular attention to the operational performance and financing performance of each company. (Hint: it may be helpful for you to create an amortization table).arrow_forward
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