Question

In: Accounting

On January 1, 2020, Larkspur Company purchased 12% bonds, having a maturity value of $275,000 for...

On January 1, 2020, Larkspur Company purchased 12% bonds, having a maturity value of $275,000 for $295,849.07. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2020, and mature January 1, 2025, with interest received on January 1 of each year. Larkspur 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.

2020

$293,800

2023

$285,900

2021

$284,800

2024

$275,000

2022

$283,800
(a) Prepare the journal entry at the date of the bond purchase.
(b) Prepare the journal entries to record the interest revenue and recognition of fair value for 2020.
(c) Prepare the journal entry to record the recognition of fair value for 2021.

Solutions

Expert Solution


Related Solutions

On January 1, 2017, Culver Company purchased 12% bonds, having a maturity value of $275,000, for...
On January 1, 2017, Culver Company purchased 12% bonds, having a maturity value of $275,000, for $295,849.07. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2017, and mature January 1, 2022, with interest received on January 1 of each year. Culver 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....
On January 1, 2020, Marigold Company purchased 12% bonds having a maturity value of $270,000, for...
On January 1, 2020, Marigold Company purchased 12% bonds having a maturity value of $270,000, for $290,470.00. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2020, and mature January 1, 2025, with interest received on January 1 of each year. Marigold Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category. 1.Prepare the journal entry at the date of the bond purchase. 2.Prepare a bond...
On January 1, 2020, Riverbed Company purchased 12% bonds, having a maturity value of $276,000 for...
On January 1, 2020, Riverbed Company purchased 12% bonds, having a maturity value of $276,000 for $296,924.88. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2020, and mature January 1, 2025, with interest received on January 1 of each year. Riverbed 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....
On January 1, 2020, Indigo Company purchased 12% bonds having a maturity value of $310,000, for...
On January 1, 2020, Indigo Company purchased 12% bonds having a maturity value of $310,000, for $333,502.59. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2020, and mature January 1, 2025, with interest received on January 1 of each year. Indigo Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category. Prepare the journal entry at the date of the bond purchase. (Enter answers to...
On January 1, 2020, Swifty Company purchased 12% bonds having a maturity value of $230,000, for...
On January 1, 2020, Swifty Company purchased 12% bonds having a maturity value of $230,000, for $247,437.40. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2020, and mature January 1, 2025, with interest received on January 1 of each year. Swifty Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category. Prepare the journal entry at the date of the bond purchase. (Enter answers to...
On January 1, 2020, Larkspur Inc. sold 14% bonds having a maturity value of $710,000 for...
On January 1, 2020, Larkspur Inc. sold 14% bonds having a maturity value of $710,000 for $761,190, which provides the bondholders with a 12% yield. The bonds are dated January 1, 2020, and mature on January 1, 2025, with interest payable on January 1 of each year. The company follows IFRS and uses the effective interest method. Prepare the journal entry at the date of issue. (Round answers to 0 decimal places, e.g. 5,255. Credit account titles are automatically indented...
On January 1, 2020, Sarasota Company purchased 10% bonds having a maturity value of $380,000, for...
On January 1, 2020, Sarasota Company purchased 10% bonds having a maturity value of $380,000, for $410,343.38. The bonds provide the bondholders with a 8% yield. They are dated January 1, 2020, and mature January 1, 2025, with interest received on January 1 of each year. Sarasota Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category. Prepare the journal entry at the date of the bond purchase.Prepare a bond amortization...
On January 1, 2020, Sheridan Company purchased 11% bonds, having a maturity value of $301,000 for...
On January 1, 2020, Sheridan Company purchased 11% bonds, having a maturity value of $301,000 for $324,415.24. The bonds provide the bondholders with a 9% yield. They are dated January 1, 2020, and mature January 1, 2025, with interest received on January 1 of each year. Sheridan 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....
On January 1, 2020, Sandhill Company purchased 8% bonds having a maturity value of $400,000, for...
On January 1, 2020, Sandhill Company purchased 8% bonds having a maturity value of $400,000, for $433,699.52. The bonds provide the bondholders with a 6% yield. They are dated January 1, 2020, and mature January 1, 2025, with interest received on January 1 of each year. Sandhill Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category. Prepare the journal entry at the date of the bond purchase. (Enter answers to...
On January 1, 2020, Sheffield Company purchased 8% bonds having a maturity value of $240,000, for...
On January 1, 2020, Sheffield Company purchased 8% bonds having a maturity value of $240,000, for $260,219.71. The bonds provide the bondholders with a 6% yield. They are dated January 1, 2020, and mature January 1, 2025, with interest received on January 1 of each year. Sheffield Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT