Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

On January 1, 2019. Riverbed and Lois Company purchased 12% bonds having a maturity value of $318,000 for $342,109.40. The bonds provide the bondholders with

image text in transcribed

image text in transcribed

image text in transcribed

On January 1, 2019. Riverbed and Lois Company purchased 12% bonds having a maturity value of $318,000 for $342,109.40. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2019, and mature on January 1, 2024, with interest receivable on December 31 of each year. Riverbed and Lois Company uses the effective interest method to allocate unamortized discount or premium. The bonds are carried at FV-OCI. The fair value of the bonds at December 31 of each year-end is as follows: 2019 $339.500 2020 $328,000 Prepare the journal entries to record the interest received and recognition of fair value for 2019. (Credit account titles are automatically indented when the 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. Round answers to 2 decimal places, eg. 52.75.) Debit Credit Date Account Titles and Explanation Dec. 31 (To record collection of interest) Dec. 31 (To record fair value adjustment) Prepare the journal entries to record the recognition of fair value for 2020 and assuming the sale of the investment for $328,000 on December 31, 2020, reclassifying any accumulated holding gains or losses to net income. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter for the amounts. Round answers to 2 decimal places, eg. 52.75.) Date Account Titles and Explanation Debit Credit Dec. 31 (To adjust to fair value at date of disposal) Dec. 31 (To record disposal) Dec. 31 (To reclassify holding loss)

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

Students also viewed these Accounting questions

Question

What is a design of experiments?

Answered: 1 week ago