Question
In: Accounting
P17-1. (Debt Securities) (LO 1) Presented below is an amortization schedule related to Spangler Company's 5-year,...
P17-1.
(Debt Securities)
(LO 1) Presented below is an amortization schedule related to Spangler Company's 5-year, $100,000 bond with a 7% interest rate and a 5% yield, purchased on December 31, 2015, for $108,660.
|
Date |
Cash Received |
Interest Revenue |
Bond Premium Amortization |
Carrying Amount of Bonds |
|
12/31/15 |
$108,660 |
|||
|
12/31/16 |
$7,000 |
$5,433 |
$1,567 |
107,093 |
|
12/31/17 |
7,000 |
5,354 |
1,646 |
105,447 |
|
12/31/18 |
7,000 |
5,272 |
1,728 |
103,719 |
|
12/31/19 |
7,000 |
5,186 |
1,814 |
101,905 |
|
12/31/20 |
7,000 |
5,095 |
1,905 |
100,000 |
The following schedule presents a comparison of the amortized cost and fair value of the bonds at year-end.
|
12/31/16 |
12/31/17 |
12/31/18 |
12/31/19 |
12/31/20 |
|
|
Amortized cost |
$107,093 |
$105,447 |
$103,719 |
$101,905 |
$100,000 |
|
Fair value |
106,500 |
107,500 |
105,650 |
103,000 |
100,000 |
Instructions
(a)
Prepare the journal entry to record the purchase of these bonds on December 31, 2015, assuming the bonds are classified as held-to-maturity securities.
(b)
Prepare the journal entry(ies) related to the held-to-maturity bonds for 2016.
(c)
Prepare the journal entry(ies) related to the held-to-maturity bonds for 2018.
(d)
Prepare the journal entry(ies) to record the purchase of these bonds, assuming they are classified as available-for-sale.
(e)
Prepare the journal entry(ies) related to the available-for-sale bonds for 2016.
(f)
Prepare the journal entry(ies) related to the available-for-sale bonds for 2018.
Solutions
ekkarill92 answered 1 year agoRelated Solutions
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Carrying
Interest
Value of
Date
Cash
Revenue
Investment
Investment
1/1/2021
95788
12/31/2021
5000
5747.27
747
96535
12/31/2022
5000
5792.10
792
97327
12/31/2023
5000
5839.63
840
98167
12/31/2024
5000
5890.01
890
99057
12/31/2025
5000
5943.41
943
100000
The following schedule presents a comparison of the
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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
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Presented below is an amortization schedule related to Cheyenne
Company’s 5-year, $120,000 bond with a 6% interest rate and a 3%
yield, purchased on December 31, 2015, for $136,487. Date Cash
Received Interest Revenue Bond Premium Amortization Carrying Amount
of Bonds 12/31/15 $136,487 12/31/16 $7,200 $4,095 $3,105 133,382
12/31/17 7,200 4,001 3,199 130,183 12/31/18 7,200 3,905 3,295
126,888 12/31/19 7,200 3,807 3,393 123,495 12/31/20 7,200 3,705
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Presented below is an amortization schedule related to Stock Company’s 5-year, $200,000 bond with a 7%...
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Company’s 5-year, $200,000 bond with a 7% stated interest rate and
a 5% market interest rate yield, purchased on December 31, 2017,
for $217,320. The interest is paid each December 31, and the
investor receives the first
interest payment on Dec 31, 2018.
The following schedule presents the fair value of the bonds at
year-end.
31.12.2018
31.12.2019
Fair value
213,000
215,000
Required:
Prepare the journal entries related to bonds for 2017...
Presented below is an amortization schedule related to Stock Company’s 5-year, $200,000 bond with a 7%...
Presented below is an amortization schedule related to Stock
Company’s 5-year, $200,000 bond with a 7% stated interest rate and
a 5% market interest rate yield, purchased on December 31, 2017,
for $217,320. The interest is paid each December 31, and the
investor receives the first
interest payment on Dec 31, 2018.
The following schedule presents the fair value of the bonds at
year-end.
31.12.2018
31.12.2019
Fair value
213,000
215,000
Required:
Prepare the journal entries related to bonds for 2017...
Presented below is an amortization schedule related to Tamarisk Company’s 5-year, $180,000 bond with a 6%...
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Company’s 5-year, $180,000 bond with a 6% interest rate and a 3%
yield, purchased on December 31, 2015, for $204,731.
Date
Cash
Received
Interest
Revenue
Bond Premium
Amortization
Carrying Amount
of Bonds
12/31/15
$204,731
12/31/16
$10,800
$6,142
$4,658
200,073
12/31/17
10,800
6,002
4,798
195,275
12/31/18
10,800
5,858
4,942
190,333
12/31/19
10,800
5,710
5,090
185,243
12/31/20
10,800
5,557
5,243
180,000
The following schedule presents a comparison of the amortized cost
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Presented below is information taken from a bond investment amortization schedule with related fair values provided....
Presented below is information taken from a bond investment
amortization schedule with related fair values provided. These
bonds are classified as available-for-sale.
12/31/20
12/31/21
12/31/22
Amortized cost
$457,200
$521,200
$526,600
Fair value
$462,700
$510,000
$526,600
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Develop an amortization schedule for a 5-year loan of $25,000 at an interest rate of 7.5%,...
Develop an amortization schedule for a 5-year loan of $25,000 at
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end of each year. Use the same format that we used in class.
Please show work in Excel
A partial amortization schedule for a 10-year note payable issued on January 1, Year 1, is...
A partial amortization schedule for a 10-year note payable
issued on January 1, Year 1, is shown next:
Accounting
Period
Principal
Balance January 1
Cash
Payment
Applied to
Interest
Applied to
Principal
Year 1
$
370,000
$
52,680
$
25,900
$
26,780
Year 2
343,220
52,680
24,025
28,655
Year 3
314,565
52,680
22,020
30,660
Required
a. Using a financial statements model like the one
shown next, record the appropriate amounts for the following two
events:
(1) January 1, Year 1,...
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