Question
In: Accounting
On January 1, 2017, Bonita Company purchased $260,000, 6% bonds of Aguirre Co. for $238,911. The...
On January 1, 2017, Bonita Company purchased $260,000, 6% bonds of Aguirre Co. for $238,911. The bonds were purchased to yield 8% interest. Interest is payable semiannually on July 1 and January 1. The bonds mature on January 1, 2022. Bonita Company uses the effective-interest method to amortize discount or premium. On January 1, 2019, Bonita Company sold the bonds for $240,370 after receiving interest to meet its liquidity needs.
| (c) | Prepare the journal entries to record the semiannual interest on (1) July 1, 2017, and (2) December 31, 2017. | |
| (d) | If the fair value of Aguirre bonds is $242,370 on December 31, 2018, prepare the necessary adjusting entry. (Assume the fair value adjustment balance on January 1, 2017, is a debit of $3,079.) | |
| (e) | Prepare the journal entry to record the sale of the bonds on January 1, 2019. |
(Round answers to 0 decimal places, e.g. 2,500. 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 |
|
|
(c) |
(1) |
July 1, 2017 |
|||
| (2) |
Dec. 31, 2017 |
||||
|
(d) |
Dec. 31, 2018 |
||||
|
(e) |
Jan. 1, 2019 |
||||
Solutions
ekkarill92 answered 2 years agoRelated Solutions
On January 1, 2017, Bonita Company purchased $260,000, 6% bonds of Aguirre Co. for $238,911. The...
On January 1, 2017, Bonita Company purchased $260,000, 6% bonds
of Aguirre Co. for $238,911. The bonds were purchased to yield 8%
interest. Interest is payable semiannually on July 1 and January 1.
The bonds mature on January 1, 2022. Bonita Company uses the
effective-interest method to amortize discount or premium. On
January 1, 2019, Bonita Company sold the bonds for $240,370 after
receiving interest to meet its liquidity needs.
Prepare the amortization schedule for the bonds.
On January 1, 2017, Pronghorn Company purchased $280,000, 6% bonds of Aguirre Co. for $257,289. The...
On January 1, 2017, Pronghorn Company purchased $280,000, 6%
bonds of Aguirre Co. for $257,289. The bonds were purchased to
yield 8% interest. Interest is payable semiannually on July 1 and
January 1. The bonds mature on January 1, 2022. Pronghorn Company
uses the effective-interest method to amortize discount or premium.
On January 1, 2019, Pronghorn Company sold the bonds for $258,816
after receiving interest to meet its liquidity needs. Prepare the
journal entry to record the purchase of bonds...
On January 1, 2017, Buffalo Company purchased $290,000, 6% bonds of Aguirre Co. for $266,477. The...
On January 1, 2017, Buffalo Company purchased $290,000, 6% bonds
of Aguirre Co. for $266,477. The bonds were purchased to yield 8%
interest. Interest is payable semiannually on July 1 and January 1.
The bonds mature on January 1, 2022. Buffalo Company uses the
effective-interest method to amortize discount or premium. On
January 1, 2019, Buffalo Company sold the bonds for $267,985 after
receiving interest to meet its liquidity needs.
(c)
Prepare the journal entries to record the semiannual interest...
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bonds of Aguirre Co. for $322,973. The bonds were purchased to
yield 10% interest. Interest is payable semiannually on July 1 and
January 1. The bonds mature on January 1, 2025. Tamarisk Company
uses the effective-interest method to amortize discount or premium.
On January 1, 2022, TamariskCompany sold the bonds for $324,733
after receiving interest to meet its liquidity needs.
Prepare the journal entry to record the purchase of bonds on...
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On January 1, 2020, Sarasota Company purchased $432,000 worth of
8% bonds of Aguirre Co. for $398,642. The bonds were purchased to
yield 10% interest. Interest is payable semi-annually, on July 1
and January 1. The bonds mature on January 1, 2025. Sarasota
Company uses the effective interest method to amortize the discount
or premium. On January 1, 2022, to meet its liquidity needs,
Sarasota Company sold the bonds for $400,384, after receiving
interest.
Prepare the journal entry to record...
Question 5 On January 1, 2020, Splish Company purchased $350,000, 8% bonds of Aguirre Co. for...
Question 5
On January 1, 2020, Splish Company purchased $350,000, 8% bonds
of Aguirre Co. for $322,973. The bonds were purchased to yield 10%
interest. Interest is payable semiannually on July 1 and January 1.
The bonds mature on January 1, 2025. Splish Company uses the
effective-interest method to amortize discount or premium. On
January 1, 2022, Splish Company sold the bonds for $324,733 after
receiving interest to meet its liquidity needs.
(e)
Prepare the journal entry to record the...
Question 5 On January 1, 2020, Splish Company purchased $350,000, 8% bonds of Aguirre Co. for...
Question 5
On January 1, 2020, Splish Company purchased $350,000, 8% bonds
of Aguirre Co. for $322,973. The bonds were purchased to yield 10%
interest. Interest is payable semiannually on July 1 and January 1.
The bonds mature on January 1, 2025. Splish Company uses the
effective-interest method to amortize discount or premium. On
January 1, 2022, Splish Company sold the bonds for $324,733 after
receiving interest to meet its liquidity needs.
Prepare the journal entry to record the purchase...
On January 1, 2017, Bonita Company purchased 11% bonds, having a maturity value of $314,000, for...
On January 1, 2017, Bonita Company purchased 11% bonds, having a
maturity value of $314,000, for $338,426.53. 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. Bonita 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....
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On January 1, 2017, Bonita Co. purchased 24,000 shares (a 10%
interest) in Elton John Corp. for $1,470,000. At the time, the book
value and the fair value of John’s net assets were $14,200,000. On
July 1, 2018, Bonita paid $2,830,000 for 48,000 additional shares
of John common stock, which represented a 20% investment in John.
The fair value of John’s identifiable assets net of liabilities was
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Stanford issues bonds dated January 1, 2017, with a par value of $260,000. The bonds’ annual...
Stanford issues bonds dated January 1, 2017, with a par value of
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1. What is the amount of the discount on these
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2. How much total bond interest expense will be
recognized over...
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