Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

On January 1, 2017, Coronado Company purchased 12% bonds, having a maturity value of $316,000, for $339,957.48. The bonds provide the bondholders with a 10%

image text in transcribedOn January 1, 2017, Coronado Company purchased 12% bonds, having a maturity value of $316,000, for $339,957.48. 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. Coronado 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 $337,900 2020 $326,400 2018 $325,300 2021 $316,000 2019 $324,200

(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 201

(Round answers to 2 decimal places, e.g. 2,525.25. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.) No. Date Account Titles and Explanation Debit Credit (a) Jan 1, 2017 Debt Investments Cash 339957.48 (6) Dec 31, 2017 Cash 37800 Cash Debt Investments 3804.25 Interest Receivable 33995.75 (To record interest received) Fair Value Adjustment 1866.77 Unrealized Holding Gain or Loss - Equity (To record fair value adjustment) (0) T Dec. 31, 2018 ~ Tunrealized Holding Gain or Loss - Equity I 9383.32 Fair Value Adjustment 9383.32

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

Quality Assessment Manual For The Internal Audit Activity

Authors: The Internal Audit Foundation

2017 Edition

0894139975, 978-0894139970

More Books

Students also viewed these Accounting questions