Question

In: Accounting

1) On January 1, 2018, Jones Jeans Co. buys a 8 year $600,000 face value bond...

1) On January 1, 2018, Jones Jeans Co. buys a 8 year $600,000 face value bond from Rawlings Inc. The bonds pay semi-annual interest on January 1 and July 1. The bonds are classified as held to maturity. Coupon=10% Yield=8% Prepare the following journal entries:

A) Find the price of the bond

B) Entry at acquisition.

C) Entry to recognize semi-annual interest revenue at 7/1/18.

D) Entry necessary if market value of the bond is $628,000 at 12/31/17.

2) Assume that Rawlings Inc. had issued $60 million, in total, of the bonds that were purchased by Jones Jeans Co. in number 1 (at price determined in problem 1). Prepare the journal entries

a) at issuance and

b) July 1 interest payments for Rawling Inc.

3) Using the information from question 1, prepare the entry at 12/31/17 for Jones Jeans Co. under the following assumptions.

a) Classified as available for sale

b) Classified as trading.

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Expert Solution

ekkarill92 answered 1 year ago
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