Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

n January 1, 2017, Pharoah Company purchased12% bonds, having a maturity value of $278,000, for $299,076.51. The bonds provide the bondholders with a10% yield. They

n January 1, 2017, Pharoah Company purchased12% bonds, having a maturity value of $278,000, for $299,076.51. The bonds provide the bondholders with a10% yield. They are dated January 1, 2017, and mature January 1, 2022, with interest received on January 1 of each year. Pharoah 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.

2017$296,6002020$288,200

2018$287,3002021$278,000

2019$286,200

(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 2017.(c)Prepare the journal entry to record the recognition of fair value for 2018.

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

Fundamentals of Financial Accounting

Authors: Fred Phillips, Robert Libby, Patricia Libby

6th edition

1259864235, 1259864230, 1260159547, 126015954X, 978-1259864230

More Books

Students also viewed these Accounting questions