Question
On January 1, 2020, the Widner Company acquired 12% bonds with a face value of $350,000 and classified them as held-to-maturity. The bonds pay interest
On January 1, 2020, the Widner Company acquired 12% bonds with a face value of $350,000 and classified them as held-to-maturity. The bonds pay interest on June 30 and December 31, and mature on December 31, 2029.
Required:
a. Assume the bonds were acquired for $312,921 to yield 14%. Prepare an investment discount amortization schedule for the first year of the investment, using the effective interest method. Assume a 360-day year. Round all calculations to the nearest dollar.
| Date | Cash (Debit) | Interest Income (Credit) | Investment in Debt Securities (Debit) | Carrying Value of Investment in Debt Securities | |||||
| 01/01/20 | $fill in the blank f73be7f89058076_1 | ||||||||
| 06/30/20 | $fill in the blank f73be7f89058076_2 | $fill in the blank f73be7f89058076_3 | $fill in the blank f73be7f89058076_4 | fill in the blank f73be7f89058076_5 | |||||
| 12/31/20 | fill in the blank f73be7f89058076_6 | fill in the blank f73be7f89058076_7 | fill in the blank f73be7f89058076_8 | fill in the blank f73be7f89058076_9 |
b. Assume the bonds were acquired for $393,618 to yield 10%. Prepare an investment premium amortization schedule for the first year of the investment using the effective interest method. Assume a 360-day year. Round all calculations to the nearest dollar.
| Date | Cash (Debit) | Interest Income (Credit) | Investment in Debt Securities (Credit) | Carrying Value of Investment in Debt Securities | |||||
| 01/01/20 | $fill in the blank 38326dfa9074f8f_1 | ||||||||
| 06/30/20 | $fill in the blank 38326dfa9074f8f_2 | $fill in the blank 38326dfa9074f8f_3 | $fill in the blank 38326dfa9074f8f_4 | fill in the blank 38326dfa9074f8f_5 | |||||
| 12/31/20 | fill in the blank 38326dfa9074f8f_6 | fill in the blank 38326dfa9074f8f_7 | fill in the blank 38326dfa9074f8f_8 | fill in the blank 38326dfa9074f8f_9 |
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