Question

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 value of the bonds at year-end.

		12/31/19		12/31/20		12/31/21		12/31/22		12/31/23
Amortized cost		$149,929		$147,625		$145,206		$142,666		$140,000
Fair value		$149,300		$149,800		$147,000		$143,800		$140,000

(a)		Prepare the journal entry to record the purchase of these bonds on December 31, 2018, assuming the bonds are classified as held-to-maturity securities.
(b)		Prepare the journal entry related to the held-to-maturity bonds for 2019.
(c)		Prepare the journal entry related to the held-to-maturity bonds for 2021.
(d)		Prepare the journal entry to record the purchase of these bonds, assuming they are classified as available-for-sale.
(e)		Prepare the journal entries related to the available-for-sale bonds for 2019.
(f)		Prepare the journal entries related to the available-for-sale bonds for 2021.

(Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

No.	Date	Account Titles and Explanation	Debit	Credit
(a)	choose a transaction date                                                          Dec. 31, 2018Dec. 31, 2019Dec. 31, 2021	enter an account title	enter a debit amount	enter a credit amount
		enter an account title	enter a debit amount	enter a credit amount
(b)	choose a transaction date                                                          Dec. 31, 2018Dec. 31, 2019Dec. 31, 2021	enter an account title	enter a debit amount	enter a credit amount
		enter an account title	enter a debit amount	enter a credit amount
		enter an account title	enter a debit amount	enter a credit amount
(c)	choose a transaction date                                                          Dec. 31, 2018Dec. 31, 2019Dec. 31, 2021	enter an account title	enter a debit amount	enter a credit amount
		enter an account title	enter a debit amount	enter a credit amount
		enter an account title	enter a debit amount	enter a credit amount
(d)	choose a transaction date                                                          Dec. 31, 2018Dec. 31, 2019Dec. 31, 2021	enter an account title	enter a debit amount	enter a credit amount
		enter an account title	enter a debit amount	enter a credit amount
(e)	choose a transaction date                                                          Dec. 31, 2018Dec. 31, 2019Dec. 31, 2021	enter an account title to record interest revenue	enter a debit amount	enter a credit amount
		enter an account title to record interest revenue	enter a debit amount	enter a credit amount
		enter an account title to record interest revenue	enter a debit amount	enter a credit amount
		(To record interest revenue.)
		enter an account title to record adjustment	enter a debit amount	enter a credit amount
		enter an account title to record adjustment	enter a debit amount	enter a credit amount
		(To record adjustment.)
(f)	choose a transaction date                                                          Dec. 31, 2018Dec. 31, 2019Dec. 31, 2021	enter an account title to record interest revenue	enter a debit amount	enter a credit amount
		enter an account title to record interest revenue	enter a debit amount	enter a credit amount
		enter an account title to record interest revenue	enter a debit amount	enter a credit amount
		(To record interest revenue.)
		enter an account title to record adjustment	enter a debit amount	enter a credit amount
		enter an account title to record adjustment	enter a debit amount	enter a credit amount
		(To record adjustment.)

Answer 1

No.	Date	Account Titles and Explanation	Debit	Credit
(a)	Dec. 31, 2018	Debt Investments	$152,123
		Cash		$152,123
(b)	Dec. 31, 2019	Cash	$ 9,800
		Interest Revenue		$    7,606
		Debt Investments		$    2,194
(c)	Dec. 31, 2021	Cash	$ 9,800
		Interest Revenue		$    7,381
		Debt Investments		$    2,419
(d)	Dec. 31, 2018	Debt Investments	$152,123
		Cash		$152,123
(e)	Dec. 31, 2019	Cash	$ 9,800
		Interest Revenue		$    7,606
		Debt Investments		$    2,194
	Dec. 31, 2019	Unrealized Holding Gain or Loss - Equity	$       629
		Fair Value Adjustment		$       629
(f)	Dec. 31, 2021	Cash	$ 9,800
		Interest Revenue		$    7,381
		Debt Investments		$    2,419
	Dec. 31, 2021	Unrealized Holding Gain or Loss - Equity	$         381
		Fair Value Adjustment		$         381

	12/31/2019
Amortized cost	$149,929
Fair value	$149,300
Unrealized Holding Gain or Loss - Equity	$629
	12/31/2020	12/31/2021
Amortized cost	$147,625	$145,206
Fair value	$149,800	$147,000
	$2,175	$1,794
Unrealized Holding Gain or Loss - Equity		$381

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