Question
In: Accounting
On January 1, 2021, Ithaca Corp. purchases Cortland Inc. bonds that have a face value of...
On January 1, 2021, Ithaca Corp. purchases Cortland Inc. bonds
that have a face value of $330,000. The Cortland bonds have a
stated interest rate of 5%. Interest is paid semiannually on June
30 and December 31, and the bonds mature in 10 years. For bonds of
similar risk and maturity, the market yield on particular dates is
as follows: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1
and PVAD of $1) (Use appropriate factor(s) from the tables
provided.):
| January 1, 2021 | 11.0 | % |
| June 30, 2021 | 12.0 | % |
| December 31, 2021 | 14.0 | % |
Required:
1. Calculate the price Ithaca would have paid for
the Cortland bonds on January 1, 2021 (ignoring brokerage fees),
and prepare a journal entry to record the purchase.
2. Prepare all appropriate journal entries related
to the bond investment during 2021, assuming Ithaca accounts for
the bonds as a held-to-maturity investment. Ithaca calculates
interest revenue at the effective interest rate as of the date it
purchased the bonds.
3. Prepare all appropriate journal entries related
to the bond investment during 2021, assuming that Ithaca chose the
fair value option when the bonds were purchased, and that Ithaca
determines fair value of the bonds semiannually. Ithaca calculates
interest revenue at the effective interest rate as of the date it
purchased the bonds.
Solutions
ekkarill92 answered 1 year agoRelated Solutions
On January 1, 2021, Ithaca Corp. purchases Cortland Inc. bonds that have a face value of...
On January 1, 2021, Ithaca Corp. purchases Cortland Inc. bonds
that have a face value of $250,000. The Cortland bonds have a
stated interest rate of 8%. Interest is paid semiannually on June
30 and December 31, and the bonds mature in 10 years. For bonds of
similar risk and maturity, the market yield on particular dates is
as follows: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1
and PVAD of $1) (Use...
On January 1, 2021, Ithaca Corp. purchases Cortland Inc. bonds that have a face value of...
On January 1, 2021, Ithaca Corp. purchases Cortland Inc. bonds
that have a face value of $240,000. The Cortland bonds have a
stated interest rate of 7%. Interest is paid semiannually on June
30 and December 31, and the bonds mature in 10 years. For bonds of
similar risk and maturity, the market yield on particular dates is
as follows: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1
and PVAD of $1) (Use...
On January 1, 2021, Ithaca Corp. purchases Cortland Inc. bonds that have a face value of...
On January 1, 2021, Ithaca Corp. purchases Cortland Inc. bonds
that have a face value of $330,000. The Cortland bonds have a
stated interest rate of 5%. Interest is paid semiannually on June
30 and December 31, and the bonds mature in 10 years. For bonds of
similar risk and maturity, the market yield on particular dates is
as follows: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1
and PVAD of $1) (Use...
On January 1, 2021, Ithaca Corp. purchases Cortland Inc. bonds that have a face value of...
On January 1, 2021, Ithaca Corp. purchases Cortland Inc. bonds
that have a face value of $230,000. The Cortland bonds have a
stated interest rate of 6%. Interest is paid semiannually on June
30 and December 31, and the bonds mature in 10 years. For bonds of
similar risk and maturity, the market yield on particular dates is
as follows: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1
and PVAD of $1) (Use...
On January 1, 2021, Ithaca Corp. purchases Cortland Inc. bonds that have a face value of...
On January 1, 2021, Ithaca Corp. purchases Cortland Inc. bonds
that have a face value of $340,000. The Cortland bonds have a
stated interest rate of 5%. Interest is paid semiannually on June
30 and December 31, and the bonds mature in 10 years. For bonds of
similar risk and maturity, the market yield on particular dates is
as follows: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1
and PVAD of $1)
January...
On January 1, 2021, Ithaca Corp. purchases Cortland Inc. bonds that have a face value of...
On January 1, 2021, Ithaca Corp. purchases Cortland Inc. bonds
that have a face value of $330,000. The Cortland bonds have a
stated interest rate of 5%. Interest is paid semiannually on June
30 and December 31, and the bonds mature in 10 years. For bonds of
similar risk and maturity, the market yield on particular dates is
as follows: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1
and PVAD of $1) (Use...
On January 1, 2021, Ithaca Corp. purchases Cortland Inc. bonds that have a face value of...
On January 1, 2021, Ithaca Corp. purchases Cortland Inc. bonds
that have a face value of $330,000. The Cortland bonds have a
stated interest rate of 5%. Interest is paid semiannually on June
30 and December 31, and the bonds mature in 10 years. For bonds of
similar risk and maturity, the market yield on particular dates is
as follows: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1
and PVAD of $1) (Use...
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stated interest rate of 6%. Interest is paid semiannually on June
30 and December 31, and the bonds mature in 10 years. For bonds of
similar risk and maturity, the market yield on particular dates is
as follows (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1
and PVAD of $1) (Use...
2a) On Auerbach Inc. January 31, 2021, B Corp. issued $700,000 face value, 9% bonds for...
2a) On Auerbach Inc. January 31,
2021, B Corp. issued $700,000 face value, 9% bonds for $700,000
cash. The bonds are dated December 31, 2020, and mature on December
31, 2030. Interest will be paid semiannually on June 30 and
December 31. What amount of accrued interest payable should B
report in its September 30, 2021, balance sheet?
Multiple Choice:
$15,750.
$31,500.
$47,250.
$42,000.
2b) Auerbach Inc. issued 6% bonds on October 1, 2021. The bonds
have a maturity date...
On January 31, 2021, B Corp. issued $600,000 face value, 12% bonds for $600,000 cash. The...
On January 31, 2021, B Corp. issued $600,000 face value, 12%
bonds for $600,000 cash. The bonds are dated December 31, 2020, and
mature on December 31, 2030. Interest will be paid semiannually on
June 30 and December 31. What amount of cash received should B
report at january 31, 2021
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