On January 1, 2017, Swifty Company purchased $280,000, 6% bonds of Aguirre Co. for $257,289. The bonds were purchased to yield 8% interest. Interest is payable semiannually on July 1 and January 1. The bonds mature on January 1, 2022. Swifty Company uses the effective-interest method to amortize discount or premium. On January 1, 2019, Swifty Company sold the bonds for $258,816 after receiving interest to meet its liquidity need
Preparc the journal entry to record the purchasc of bonds on January 1. Assume that the bonds arc classificd as available-for-salc. Credit account titles are automatically indented when amount is entered. Do not indent manaly, If no entry is required, select "No Entry for the account titles and enter O for the amountsJ Date Account Titles and Explanation Debit Credit Jan. 1.2017t Investments Cash Schedule of Interest Revenue and Bond Discount Amortization-Effective-Interest Method Bonds Purchased to Yield Interest Receivable Or Cash Received Interest Revenue Bond Discount Amortization Carrying Amount of Bonds Date 1/1/20 7/1/20 1/1/21 7/1/21 1/1/22 Total (c) Prepare the journal entries to record the semiannual interest on (1) July 1,2017, and (2) December 31, 2017. (d) f the fair value of Aguirre bonds is $260,816 on December 31,2018, prepare the necessary adjusting entry. (Assume the fair value adjustment balance on January 1.2017, is a debit of $3.620.) (e) Prepare the journal entry to record the sale of the bonds on January 1.2019 Round answers to O decimal places, eg. 2,500. 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 (c) (1) July 1,2017 (2) Dec. 31,2017 (d) Dec. 31.2018 (e) Jan. 1,2019 Preparc the journal entry to record the purchasc of bonds on January 1. Assume that the bonds arc classificd as available-for-salc. Credit account titles are automatically indented when amount is entered. Do not indent manaly, If no entry is required, select "No Entry for the account titles and enter O for the amountsJ Date Account Titles and Explanation Debit Credit Jan. 1.2017t Investments Cash Schedule of Interest Revenue and Bond Discount Amortization-Effective-Interest Method Bonds Purchased to Yield Interest Receivable Or Cash Received Interest Revenue Bond Discount Amortization Carrying Amount of Bonds Date 1/1/20 7/1/20 1/1/21 7/1/21 1/1/22 Total (c) Prepare the journal entries to record the semiannual interest on (1) July 1,2017, and (2) December 31, 2017. (d) f the fair value of Aguirre bonds is $260,816 on December 31,2018, prepare the necessary adjusting entry. (Assume the fair value adjustment balance on January 1.2017, is a debit of $3.620.) (e) Prepare the journal entry to record the sale of the bonds on January 1.2019 Round answers to O decimal places, eg. 2,500. 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 (c) (1) July 1,2017 (2) Dec. 31,2017 (d) Dec. 31.2018 (e) Jan. 1,2019
