Question
In: Accounting
Sarasota Company purchased, on January 1, 2017, as a held-to-maturity investment, $79,000 of the 9%, 5-year...
Sarasota Company purchased, on January 1, 2017, as a held-to-maturity investment, $79,000 of the 9%, 5-year bonds of Chester Corporation for $73,161, which provides an 11% return. Prepare Sarasota’s journal entries for (a) the purchase of the investment, and (b) the receipt of annual interest and discount amortization. Assume effective-interest amortization is used
Solutions
Expert Solution
| Transaction | General Journal | Debit | Credit |
| (a) | Investment in bonds | $ 73,161.00 | |
| Cash | $ 73,161.00 | ||
| (Investment in bonds purchased) | |||
| (b) | Cash | $ 7,110.00 | |
| Investment in bonds | $ 937.71 | ||
| Interest income | $ 8,047.71 | ||
| (To record interest revenue) |
| Amortization table | |||||
| Period | Cash payment | Interest expense | Discount on Bonds payable | Carrying Value of Bond | |
| Issued at the beg of 2017 | $ 5,839.00 | $ 73,161.00 | |||
| 2017 | $ 7,110.00 | $ 8,047.71 | $ 937.71 | $ 74,098.71 | |
ekkarill92 answered 6 months agoRelated Solutions
On January 1, 2017, Monty Company purchased 9% bonds having a maturity value of $290,000, for...
On January 1, 2017, Monty Company purchased 9% bonds having a
maturity value of $290,000, for $313,782.32. The bonds provide the
bondholders with a 7% yield. They are dated January 1, 2017, and
mature January 1, 2022, with interest receivable January 1 of each
year. Monty Company uses the effective-interest method to allocate
unamortized discount or premium. The bonds are classified in the
held-to-maturity category.
Prepare the journal entry at the date of the bond
purchase.
Prepare a bond amortization...
On January 1, 2017, Bridgeport Company purchased 9% bonds having a maturity value of $330,000, for...
On January 1, 2017, Bridgeport Company purchased 9% bonds having
a maturity value of $330,000, for $357,062.64. The bonds provide
the bondholders with a 7% yield. They are dated January 1, 2017,
and mature January 1, 2022, with interest receivable January 1 of
each year. Bridgeport Company uses the effective-interest method to
allocate unamortized discount or premium. The bonds are classified
in the held-to-maturity category.
a)Prepare the journal entry at the date of the bond purchase.
(Enter answers to 2...
On January 1, 2017, Sheridan Company purchased 9% bonds having a maturity value of $ 290,000, for...
On January 1, 2017, Sheridan Company purchased 9%
bonds having a maturity value of $ 290,000, for $ 313,782.32. The
bonds provide the bondholders with a 7% yield. They are
dated January 1, 2017, and mature January 1, 2022, with interest
receivable January 1 of each year. Sheridan Company uses the
effective-interest method to allocate unamortized discount or
premium. The bonds are classified in the held-to-maturity
category.
a. Prepare the journal entry at the date of the bond purchase.
(Enter answers to...
On January 1, 2020, Sarasota Company purchased 10% bonds having a maturity value of $380,000, for...
On January 1, 2020, Sarasota Company purchased 10% bonds having
a maturity value of $380,000, for $410,343.38. The bonds provide
the bondholders with a 8% yield. They are dated January 1, 2020,
and mature January 1, 2025, with interest received on January 1 of
each year. Sarasota Company uses the effective-interest method to
allocate unamortized discount or premium. The bonds are classified
in the held-to-maturity category. Prepare the journal entry at the
date of the bond purchase.Prepare a bond amortization...
On January 1, 2020, Sarasota Company purchased 8% bonds having a maturity value of $280,000, for...
On January 1, 2020, Sarasota Company purchased 8% bonds having a
maturity value of $280,000, for $303,589.66. The bonds provide the
bondholders with a 6% yield. They are dated January 1, 2020, and
mature January 1, 2025, with interest received on January 1 of each
year. Sarasota Company uses the effective-interest method to
allocate unamortized discount or premium. The bonds are classified
in the held-to-maturity category.
Prepare the journal entry at the date of the bond purchase.
(Enter answers to...
Correction of an Error. On January 1, 2017, Camano Company purchased a 5-year insurance policy for...
Correction of an Error. On January
1, 2017, Camano Company purchased a 5-year insurance policy for
$150,000. The company erroneously expensed the entire premium in
2017. This error was discovered early in 2019.
Prepare the journal entry Camano should make in 2019 for the
correction of this error. Assume an income tax rate of 30%
What other steps should Camano take related to this error?
Marigold Company purchased, on January 1, 2017, as an available-for-sale security, $88,000 of the 12%, 5-year...
Marigold Company purchased, on January 1, 2017, as an
available-for-sale security, $88,000 of the 12%, 5-year bonds of
Chester Corporation for $81,958, which provides an 14% return.
Prepare Marigold’s journal entries for (a) the purchase of the
investment, (b) the receipt of annual interest and discount
amortization, and (c) the year-end fair value adjustment. (Assume a
zero balance in the Fair Value Adjustment account.) The bonds have
a year-end fair value of $83,600. (
Coronado Company issues $26000000, 5%, 5-year bonds dated January 1, 2017 on January 1, 2017. The...
Coronado Company issues $26000000, 5%, 5-year bonds dated
January 1, 2017 on January 1, 2017. The bonds pay interest
semiannually on June 30 and December 31. The bonds are issued to
yield 4%. What are the proceeds from the bond issue?
Answers given:
$27156209
$26000000
$27167784
$27160279
On January 1, 2017, Pronghorn Company purchased 10% bonds having a maturity value of $380,000, for...
On January 1, 2017, Pronghorn Company purchased 10% bonds having
a maturity value of $380,000, for $410,343.38. The bonds provide
the bondholders with a 8% yield. They are dated January 1, 2017,
and mature January 1, 2022, with interest receivable January 1 of
each year. Pronghorn Company uses the effective-interest method to
allocate unamortized discount or premium. The bonds are classified
in the held-to-maturity category.
Prepare the journal entry at the date of the bond purchase.
Prepare a bond amortization...
On January 1, 2017, Grouper Company purchased 11% bonds, having a maturity value of $313,000, for...
On January 1, 2017, Grouper Company purchased 11% bonds, having
a maturity value of $313,000, for $337,348.74. The bonds provide
the bondholders with a 9% yield. They are dated January 1, 2017,
and mature January 1, 2022, with interest received on January 1 of
each year. Grouper Company uses the effective-interest method to
allocate unamortized discount or premium. The bonds are classified
as available-for-sale category. The fair value of the bonds at
December 31 of each year-end is as follows....
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Festus and Fran have decided to buy a house. The purchase price is $175,000. They have...
- Financing Deficit Garlington Technologies Inc.'s 2018 financial statements are shown below: Balance Sheet as of December...
- Tesco is a customer-orientated business. It aims to offer products that provide value for money for...
- Discuss a movie that focuses on individuals mental illness. 1. What movie did you watch and...
- So previously in my class I had to write a python program where the user would...
- You are considered to be an expert in false memories, and a local district attorney has...
- Financing Deficit Stevens Textile Corporation's 2018 financial statements are shown below: Balance Sheet as of December...
ADVERTISEMENT