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
ekkarill92 answered 8 months agoRelated Solutions
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