Question
On January 1, 2020, Riverbed Corp. acquires $324,000 of Spider Products Inc. 8% bonds at a price of $300,247. The interest is payable each December
On January 1, 2020, Riverbed Corp. acquires $324,000 of Spider Products Inc. 8% bonds at a price of $300,247. The interest is payable each December 31, and the bonds mature on December 31, 2022. The investment will provide Riverbed Corp. with a 11% yield. Riverbed Corp. applies IFRS and accounts for this investment using the amortized cost model.
Schedule of Interest Income and Bond Discount Amortization Effective Interest Method | ||||||||
Date | Cash Received | Interest Income | Bond Discount Amortization | Carrying Amount of Bonds | ||||
01/01/20 | $enter a dollar amount rounded to 0 decimal places | |||||||
12/31/20 | $enter a dollar amount rounded to 0 decimal places | $enter a dollar amount rounded to 0 decimal places | $enter a dollar amount rounded to 0 decimal places | enter a dollar amount rounded to 0 decimal places | ||||
12/31/21 | enter a dollar amount rounded to 0 decimal places | enter a dollar amount rounded to 0 decimal places | enter a dollar amount rounded to 0 decimal places | enter a dollar amount rounded to 0 decimal places | ||||
12/31/22 | enter a dollar amount rounded to 0 decimal places | enter a dollar amount rounded to 0 decimal places | enter a dollar amount rounded to 0 decimal places | enter a dollar amount rounded to 0 decimal places |
Prepare the journal entry to record interest received and interest income on December 31, 2021. (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 0 for the amounts. Round answers to 0 decimal places, e.g. 5,275.)
Date | Account Titles and Explanation | Debit | Credit |
Dec 31, 2021 | enter an account title for the journal entry on December 31 | enter a debit amount | enter a credit amount |
enter an account title for the journal entry on December 31 | enter a debit amount | enter a credit amount | |
enter an account title for the journal entry on December 31 | enter a debit amount | enter a credit amount |
Prepare the journal entries to record interest received and interest income on December 31, 2022, and the maturity of the bond. (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 0 for the amounts. Round answers to 0 decimal places, e.g. 5,275.)
Date | Account Titles and Explanation | Debit | Credit |
Dec 31, 2022 | enter an account title to record collection of interest on December 31 | enter a debit amount | enter a credit amount |
enter an account title to record collection of interest on December 31 | enter a debit amount | enter a credit amount | |
enter an account title to record collection of interest on December 31 | enter a debit amount | enter a credit amount | |
(To record collection of interest) | |||
Dec 31, 2022 | enter an account title to record maturity of bond investment on December 31 | enter a debit amount | enter a credit amount |
enter an account title to record maturity of bond investment on December 31 | enter a debit amount | enter a credit amount | |
(To record maturity of bond investment) |
List of Accounts
Prepare the entry for the disposal of the investment if Riverbed had sold the bond on December 31, 2021 for $283,200 instead of holding it to maturity. Assume that 2021 interest received and interest income have already been recorded. (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 0 for the amounts. Round answers to 0 decimal places, e.g. 5,275.)
Account Titles and Explanation | Debit | Credit |
enter an account title | enter a debit amount | enter a credit amount |
enter an account title | enter a debit amount | enter a credit amount |
enter an account title | enter a debit amount | enter a credit amount |
List of Accounts
- Accumulated Other Comprehensive Income
- Allowance for Investment Impairment
- Bond Investment at Amortized Cost
- Cash
- Dividends Receivable
- Dividend Revenue
- FV-NI Investments
- FV-OCI Investments
- Gain on Disposal of Investments in Associate
- Gain on Disposal of Investments - Cost/Amortized Cost
- Gain on Disposal of Investments - FV-NI
- Gain on Disposal of Investments - FV-OCI
- Gain or Loss in Value of Investment Property
- GST Receivable
- Interest Expense
- Interest Income
- Interest Payable
- Interest Receivable
- Investment in Associate
- Investment Income or Loss
- Loss on Discontinued Operations
- Loss on Disposal of Investments - Cost/Amortized Cost
- Loss on Disposal of Investments - FV-NI
- Loss on Disposal of Investments - FV-OCI
- Loss on Impairment
- No Entry
- Note Investment at Amortized Cost
- Other Investments
- Recovery of Loss from Impairment
- Retained Earnings
- Unrealized Gain or Loss
- Unrealized Gain or Loss - OCI
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