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Help im very lost Problem 2 [discount, temporary appreciation, HTM] On June 30, 2020 ABC purchased $500,000 par value bonds dated June 30, 2020 at
Help im very lost
Problem 2 [discount, temporary appreciation, HTM] On June 30, 2020 ABC purchased $500,000 par value bonds dated June 30, 2020 at a purchase price of $462,806. The coupon rate on the bonds is 5% per year and the purchase price of the bonds yield an effective rate of 6% per year. The bonds pay interest semiannually on June 30 and December 31st and mature on June 30, 2030. The fiscal year of ABC ends on December 31st. The fair market value of the bonds on December 31, 2020 was 470,000. ABC received the December 31 interest payment on December 31, 2020. ABC classifies the bonds as Held-To-Maturity. All questions below pertain to the accounting for the investment by ABC. 1. Prepare all journal entries related to the bond investment that is necessary for ABC to issue GAAP compliant financial statements for the year ended December 31, 2020. Enter your answer below. Choose the account from the drop-down list in the yellow cell. Enter the amount of the entry in the green box. Entry to record purchase of bond on 6/30/2020: Account Debit Credit 1 1 1 Entries at 12/31/2020: Account Debit Credit NNN 2 2 2. What will be the post-adjustment December 31, 2020 amortized cost of the bond? Enter your answer in the green box 3 3. What will be the post-adjustment December 31, 2020 balance in the Fair Value Adjustment account? Enter your answer in the green box 4. What amount of interest revenue will be reported on the 2020 income statement? Enter your answer in the green box 5 5. At what amount will the investment in bonds be reported in the asset section of the December 31, 2020 balance sheet? Enter your answer in the green box 6 6. What amount of unrealized holding gain (if any) will be reported as a component of net income for the year ended December 31, 2020? Enter your answer in the green box 7 7. What amount of unrealized holding gain (if any) will be reported as a component of other comprehensive income for the year ended December 31, 2020? Enter your answer in the green box 8 8. Assume that ABC sold the bonds on January 2, 2021 for $471,000. Prepare all entries to record the sale. Entry to record sale of bond on 1/2/2021: Account Debit Credit 9 9 9 9Step by Step Solution
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