Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

I would really appreciate some help with these questions. They are held to maturity securities and available for sale. Its A through F and they

I would really appreciate some help with these questions. They are held to maturity securities and available for sale. Its A through F and they all have to do with the question above. Thank you so much! image text in transcribed
1.Held-to-Maturity and Available-for-Sale Debt Investments (20 points) On January 1, 2018, Folsom Company purchased 6% (annual) bonds, having a maturity (par) value of $400,000. The bonds provide the bondholders with a 4% (annual) yield. They are dated January 1, 2018, and mature December 31, 2027, with interest receivable June 30 and December 31 of each year. Folsom Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category Instructions: (a) Calculate the cost of the bonds for Folsom and prepare the journal entry at the date of the bond purchase. (b) Prepare the first three years of a bond amortization schedule. (c) Prepare the journal entries to record the interest received and amortization for 2019. (d) Prepare the necessary fair value adjustment journal entries if the bonds were instead classified as Available-for-Sale and the Fair Values at 12/31/2018 and 12/31/19 were $458,000 and $456,000, respectively. (e) On December 31, 2020, Folsom sold the bonds for $450,000. Assuming the interest payment was received prior to the sale, what is the gain or loss on the sale of the bonds? You can assume that the bonds were classified as Available-for-Sale. (f) Assume also that as of December 31, 2020, Folsom held no other bonds in its Available- for-Sale Debt Investment portfolio. What other journal entry could be required to remove the investment entirely from Folsom's books

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Quality Audit Handbook

Authors: Asq Quality Audit Division, J. P. Russell

2nd Edition

087389460X, 978-0873894609

More Books

Students also viewed these Accounting questions