Question
In: Accounting
Presented below is an amortization schedule related to Mets Company’s 5-year, $100,000 bond with a 5%...
Presented below is an amortization schedule related to Mets Company’s 5-year, $100,000 bond with a 5% interest rate and a 6% yield, purchased on December 31, 2020, for $95,788.
|
Carrying |
||||
|
Interest |
Value of |
|||
|
Date |
Cash |
Revenue |
Investment |
Investment |
|
1/1/2021 |
95788 |
|||
|
12/31/2021 |
5000 |
5747.27 |
747 |
96535 |
|
12/31/2022 |
5000 |
5792.10 |
792 |
97327 |
|
12/31/2023 |
5000 |
5839.63 |
840 |
98167 |
|
12/31/2024 |
5000 |
5890.01 |
890 |
99057 |
|
12/31/2025 |
5000 |
5943.41 |
943 |
100000 |
The following schedule presents a comparison of the amortized cost and fair value of the bonds at year-end.
12/31/21 12/31/22 12/31/23 12/31/24 12/31/25
Amortized cost $96,535 $97,327 $98,167 $99,057 $100,000
Fair value $97,250 $97,100 $97,375 $99,500 $100,000
Instructions
(a) Prepare the journal entry to record the purchase of these bonds on December 31, 2020, assuming the bonds are classified as held-to-maturity securities.
(b) Prepare the journal entry(ies) related to the held-to-maturity bonds for 2021.
(c) Prepare the journal entry(ies) related to the held-to-maturity bonds for 2023.
(d) Prepare the journal entry(ies) to record the purchase of these bonds, assuming they are classified as available-for-sale.
(e) Prepare the journal entry(ies) related to the available-for-sale bonds for 2021.
(f) Prepare the journal entry(ies) related to the available-for-sale bonds for 2023.
Solutions
Expert Solution
| Date | Account Titles & Explanation | Debit | Credit |
| 31-Dec-20 | Held-to-Maturity Securities | $ 95,788.00 | |
| Cash | $ 95,788.00 | ||
| 31-Dec-21 | Cash | $ 5,000.00 | |
| Held-to-Maturity Securities | $ 747.00 | ||
| Interest Revenue | $ 5,747.27 | ||
| 31-Dec-23 | Cash | $ 5,000.00 | |
| Held-to-Maturity Securities | $ 840.00 | ||
| Interest Revenue | $ 5,839.63 | ||
| 31-Dec-20 | Available-for-Sale Securities | $ 95,788.00 | |
| Cash | $ 95,788.00 | ||
| 31-Dec-21 | Cash | $ 5,000.00 | |
| Available-for-Sale Securities | $ 747.00 | ||
| Interest Revenue | $ 5,747.27 | ||
| Securities Fair Value Adjustment ((Available-for-Sale) | $ 715.00 | ||
| Unrealized Holding Gain or Loss— Equity | $ 715.00 | ||
| (97,250 -96,535) | |||
| 31-Dec-23 | Cash | $ 5,000.00 | |
| Available-for-Sale Securities | $ 840.00 | ||
| Interest Revenue | $ 5,839.63 | ||
ekkarill92 answered 1 year agoRelated Solutions
Presented below is an amortization schedule related to Riverbed Company’s 5-year, $140,000 bond with a 7%...
Presented below is an amortization schedule related to Riverbed
Company’s 5-year, $140,000 bond with a 7% interest rate and a 5%
yield, purchased on December 31, 2018, for $152,123.
Date
Cash
Received
Interest
Revenue
Bond Premium
Amortization
Carrying Amount
of Bonds
12/31/18
$152,123
12/31/19
$9,800
$7,606
$2,194
149,929
12/31/20
9,800
7,496
2,304
147,625
12/31/21
9,800
7,381
2,419
145,206
12/31/22
9,800
7,260
2,540
142,666
12/31/23
9,800
7,134
2,666
140,000
The following schedule presents a comparison of the amortized cost
and fair...
Presented below is an amortization schedule related to Cheyenne Company’s 5-year, $120,000 bond with a 6%...
Presented below is an amortization schedule related to Cheyenne
Company’s 5-year, $120,000 bond with a 6% interest rate and a 3%
yield, purchased on December 31, 2015, for $136,487. Date Cash
Received Interest Revenue Bond Premium Amortization Carrying Amount
of Bonds 12/31/15 $136,487 12/31/16 $7,200 $4,095 $3,105 133,382
12/31/17 7,200 4,001 3,199 130,183 12/31/18 7,200 3,905 3,295
126,888 12/31/19 7,200 3,807 3,393 123,495 12/31/20 7,200 3,705
3,495 120,000 The following schedule presents a comparison of the
amortized cost and fair...
Presented below is an amortization schedule related to Stock Company’s 5-year, $200,000 bond with a 7%...
Presented below is an amortization schedule related to Stock
Company’s 5-year, $200,000 bond with a 7% stated interest rate and
a 5% market interest rate yield, purchased on December 31, 2017,
for $217,320. The interest is paid each December 31, and the
investor receives the first
interest payment on Dec 31, 2018.
The following schedule presents the fair value of the bonds at
year-end.
31.12.2018
31.12.2019
Fair value
213,000
215,000
Required:
Prepare the journal entries related to bonds for 2017...
Presented below is an amortization schedule related to Stock Company’s 5-year, $200,000 bond with a 7%...
Presented below is an amortization schedule related to Stock
Company’s 5-year, $200,000 bond with a 7% stated interest rate and
a 5% market interest rate yield, purchased on December 31, 2017,
for $217,320. The interest is paid each December 31, and the
investor receives the first
interest payment on Dec 31, 2018.
The following schedule presents the fair value of the bonds at
year-end.
31.12.2018
31.12.2019
Fair value
213,000
215,000
Required:
Prepare the journal entries related to bonds for 2017...
Presented below is an amortization schedule related to Tamarisk Company’s 5-year, $180,000 bond with a 6%...
Presented below is an amortization schedule related to Tamarisk
Company’s 5-year, $180,000 bond with a 6% interest rate and a 3%
yield, purchased on December 31, 2015, for $204,731.
Date
Cash
Received
Interest
Revenue
Bond Premium
Amortization
Carrying Amount
of Bonds
12/31/15
$204,731
12/31/16
$10,800
$6,142
$4,658
200,073
12/31/17
10,800
6,002
4,798
195,275
12/31/18
10,800
5,858
4,942
190,333
12/31/19
10,800
5,710
5,090
185,243
12/31/20
10,800
5,557
5,243
180,000
The following schedule presents a comparison of the amortized cost
and fair...
Presented below is information taken from a bond investment amortization schedule with related fair values provided....
Presented below is information taken from a bond investment
amortization schedule with related fair values provided. These
bonds are classified as available-for-sale.
12/31/20
12/31/21
12/31/22
Amortized cost
$457,200
$521,200
$526,600
Fair value
$462,700
$510,000
$526,600
(a) Indicate whether the bonds were purchased at a
discount or at a premium.
DiscountPremium
(b)
Prepare the adjusting entry to record the bonds at fair...
P17-1. (Debt Securities) (LO 1) Presented below is an amortization schedule related to Spangler Company's 5-year,...
P17-1.
(Debt Securities)
(LO 1) Presented below is an amortization schedule related to
Spangler Company's 5-year, $100,000 bond with a 7% interest rate
and a 5% yield, purchased on December 31, 2015, for $108,660.
Date
Cash Received
Interest Revenue
Bond Premium Amortization
Carrying Amount of Bonds
12/31/15
$108,660
12/31/16
$7,000
$5,433
$1,567
107,093
12/31/17
7,000
5,354
1,646
105,447
12/31/18
7,000
5,272
1,728
103,719
12/31/19
7,000
5,186
1,814
101,905
12/31/20
7,000
5,095
1,905
100,000
The following schedule presents a comparison of...
Presented below is a partial amortization schedule for Discount Pizza.
Presented below is a partial amortization schedule for Discount Pizza. 1. Record the bond issue assuming the face amount of bonds payable is $70,000.2. Record the first interest payment.3. Explain why interest expense increases each period.
a. Prepare the amortization schedule for a thirty-year loan of $100,000. The APR is 3% and...
a. Prepare the amortization schedule for a thirty-year loan of
$100,000. The APR is 3% and the loan calls for equal monthly
payments. The following table shows how you should prepare the
amortization schedule for the loan. Month Beginning Balance Total
Payment Interest Payment Principal Payment Ending Balance 1
$100,000.00
b. Use the annuity formula to find how much principal you still
owe to the bank at the end of the third year. Check that this value
is the same...
Problem 5-50 Amortization Schedule (LG9) Create the amortization schedule for a loan of $4,300, paid monthly...
Problem 5-50 Amortization Schedule (LG9)
Create the amortization schedule for a loan of $4,300, paid
monthly over two years using an 9 percent APR. (Round your
answers to 2 decimal places.)
Month Beginning
Balance Total
Payment Interest
Paid Principal
Paid Ending
Balance
1
2
3
4
5
6
7 ...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Q4. Describe and give two examples of the queue systems with the following Kendall’s classifications: (i)...
- (a) Have you ever visited an amusement park and taken a ride on a parachute drop...
- In Java please What happens if you call factorial( with a negative value of n? With...
- (i)How much negative charge and how much positive charge are there on the electrons and the...
- Scrutinize Zimbabwe’s economic policies after 1980. How successful have they been over time?[25 MARKS/ 5 PAGES]
- Given an infinite sheet of charge occupying the x-y plane such that the charge density is...
- 1. Identify an organization (SABIC SAUDI COMPANY) (manufacturing/service). 2. What does it manufacture (or what kind...
ADVERTISEMENT