Question
In: Accounting
On January 1, 2017, AJ Corporation purchased bonds with a face value of $300,000 for $308,373.53....
On January 1, 2017, AJ Corporation purchased bonds with a face value of $300,000 for $308,373.53. The bonds are due June 30, 2020, carry a 13% stated interest rate, and were purchased to yield 12%. Interest is payable semiannually on June 30 and December 31. On March 31, 2018, in contemplation of a major acquisition, the company sold one-half the bonds for $159,500 including accrued interest; the remainder were held until maturity.
- Prepare an investment interest income and bond premium amortization schedule using the effective interest method.
- Prepare the journal entries to record the purchase of the bonds.
- Prepare the journal entries to record each interest payment.
- Prepare the journal entries to record the partial sale of the investment on March 31, 2018, and the retirement of the bond issue on June 30, 2020.
Complete the following questions. In addition to answering the
items below, you must submit an analysis of the assignment. Analyze
the specific outcomes and write an analysis directed toward the
team at AJ Corporation describing what the numbers mean and how
they relate to the business.
Solutions
ekkarill92 answered 1 year agoRelated Solutions
On January 1, 2017, AJ Corporation purchased bonds with a face value of $300,000 for $308,373.53....
On January 1, 2017, AJ Corporation purchased bonds with a face
value of $300,000 for $308,373.53. The bonds are due June 30, 2020,
carry a 13% stated interest rate, and were purchased to yield 12%.
Interest is payable semiannually on June 30 and December 31. On
March 31, 2018, in contemplation of a major acquisition, the
company sold one-half the bonds for $159,500 including accrued
interest; the remainder were held until maturity.
Prepare an investment interest income and bond premium...
Hi i need analysis on textbook sollution On January 1, 2017, AJ Corporation purchased bonds with...
Hi i need analysis on textbook sollution On January 1, 2017, AJ
Corporation purchased bonds with a face value of $300,000 for
$308,373.53. The bonds are due June 30, 2020, carry a 13% stated
interest rate, and were purchased to yield 12%. Interest is payable
semiannually on June 30 and December 31. On March 31, 2018, in
contemplation of a major acquisition, the company sold one-half the
bonds for $159,500 including accrued interest; the remainder were
held until maturity. (Analyze...
Jaguar Corporation issues term bonds with a face value of $300,000 on January 1, Year One....
Jaguar Corporation issues term bonds with a face value of
$300,000 on January 1, Year One. The bonds have a stated rate of
interest of 7 percent per year and a life of four years. They pay
this interest annually on December 31. Because the market rate of
interest at that time was 9 percent, the bonds were issued at a
discount to create an effective annual rate of 9 percent. The
present value of $1 in 4 periods at...
On January 1, 2017, Swifty Corporation sold 12% bonds with a face value of $2600000. The...
On January 1, 2017, Swifty Corporation sold 12% bonds with a
face value of $2600000. The bonds mature in five years, and
interest is paid semiannually on June 30 and December 31. The bonds
were sold for $2800800 to yield 10%.
Using the effective-interest method of amortization, interest
expense for 2017 is
a
$280030.
b
$312000.
c $260000.
d $279282.
On January 1, Year 1 Alcorn Corporation purchased $95,000 of 9% bonds at face value. The...
On January 1, Year 1 Alcorn Corporation purchased $95,000 of 9%
bonds at face value. The bonds are classified as a held-to-maturity
investment. The bonds pay interest semiannually on January 1 and
July 1. On December 31, Year 1, the fair value of the bonds is
$98,000. Alcorn's fiscal year ends on December 31.
Required:
1. Prepare the journal entries to record the acquisition of the
bonds and the first two interest payments. Include any year-end
adjusting entries.
2. If...
1. On January 1, 2017, bonds with a face value of $94,000 were sold. The bonds...
1. On January 1, 2017, bonds with a face value of $94,000 were
sold. The bonds mature on January 1, 2027. The face interest rate
is 8% annually. The bonds pay interest semiannually on July 1 and
January 1. The market rate of interest is 10% annually. What is
the market price of the bonds? The present value of $1 for 20
periods at 5% is 0.377. The present value of an ordinary annuity
of $1 for 20 periods at...
On January 1, 2017, Shirley Corporation puchased 10% bonds dated January 1, 2017, with a face...
On January 1, 2017, Shirley Corporation puchased 10% bonds dated
January 1, 2017, with a face amount of $10 million. The bonds
mature in 10 years. For bonds of similiar risk and maturity, the
market yield is 12%. Interest is paid semiannually on June 30 and
December 31.
1. record journal entry to record the bond purchase by Shirley
on January 1, 2017
2. prepare journal entry to record interest on June 30, 2017,
using the effective interest method.
3....
a. On January 1, 2017, Buffalo Corporation purchased 333 of the $1,000 face value, 9%, 10-year...
a. On January 1, 2017, Buffalo Corporation purchased 333 of the
$1,000 face value, 9%, 10-year bonds of Walters Inc. The bonds
mature on January 1, 2027, and pay interest annually beginning
January 1, 2018. Buffalo purchased the bonds to yield 11%. How much
did Buffalo pay for the bonds?
Buffalo must pay for the bonds = ?
b. Buffalo Corporation purchased a special tractor on December
31, 2017. The purchase agreement stipulated that Buffalo should pay
$20,180 at the...
On January 1, 2017, Crawford Corporation issued five-year, 4% bonds payable with a face value of...
On January 1, 2017, Crawford Corporation issued five-year,
4% bonds payable with a face value of
$2,600,000. The bonds were issued at 88 and pay interest on
January 1 and July 1. Crawford amortizes bond discounts using the
straight-line method. On December 31, 2019, Crawford retired the
bonds early by purchasing them at a market price of 94. The
company's fiscal year ends on December 31.
1. Journalize the issuance of the bonds on January 1,
2017.
2. Record the...
Impact of a Discount Berol Corporation sold 20-year bonds on January 1, 2017. The face value...
Impact of a Discount
Berol Corporation sold 20-year bonds on January 1, 2017. The
face value of the bonds was $100,000, and they carry a 9% stated
rate of interest, which is paid on December 31 of every year. Berol
received $95,350 in return for the issuance of the bonds when the
market rate was 10%. Any premium or discount is amortized using the
effective interest method.
1. How does this entry affect the accounting equation? If a
financial statement...
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