Question
On January 1, 2021, Marin Inc., a public company, purchased $470,000 of Pearl Corporations five-year, 5% bonds for $491,109 when the market interest rate was
On January 1, 2021, Marin Inc., a public company, purchased $470,000 of Pearl Corporations five-year, 5% bonds for $491,109 when the market interest rate was 4%. Interest is received semi-annually on July 1 and January 1. Marins year end is December 31. Marin intends to hold Pearls bonds until January 1, 2026, the date the bonds mature. The bonds fair value on December 31, 2021, was $480,000
Record the purchase of the bonds on January 1, 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.)
Date | Account Titles and Explanation | Debit | Credit |
Jan. 1 | Long-Term Investment at FVTOCIBondsInvestment Income or LossShort-Term Investment at FVTPLBondsInterest ReceivableInvestments at Amortized CostNo EntryInterest RevenueInterest PayableTrading Investments-Pearl BondsCash | ||
Short-Term Investment at FVTPLBondsTrading Investments-Pearl BondsInterest RevenueInterest PayableCashNo EntryInvestment Income or LossLong-Term Investment at FVTOCIBondsInterest ReceivableInvestments at Amortized Cost |
|
Prepare the entry to record the receipt of interest on July 1, 2021.
Date | Account Titles and Explanation | Debit | Credit |
Jul. 1 | Long-Term Investment at FVTOCIBondsNo EntryInvestment Income or LossInterest RevenueInvestments at Amortized CostShort-Term Investment at ACBondsCashInterest ReceivableInterest PayableShort-Term Investment at FVTPLBonds | ||
No EntryLong-Term Investment at FVTOCIBondsCashInterest ReceivableShort-Term Investment at ACBondsInterest RevenueInvestments at Amortized CostInterest PayableShort-Term Investment at FVTPLBondsInvestment Income or Loss | |||
Long-Term Investment at FVTOCIBondsShort-Term Investment at ACBondsInterest RevenueNo EntryInterest PayableInvestment Income or LossCashInterest ReceivableInvestments at Amortized CostShort-Term Investment at FVTPLBonds |
Prepare the adjusting entry required at December 31, 2021.
Date | Account Titles and Explanation | Debit | Credit |
Dec. 31 | Interest RevenueLong-Term Investment at FVTOCIBondsShort-Term Investment at FVTPLBondsShort-Term Investment at ACBondsCashInterest PayableNo EntryInvestment Income or LossInvestments at Amortized CostInterest Receivable | ||
Interest ReceivableCashShort-Term Investment at ACBondsShort-Term Investment at FVTPLBondsNo EntryLong-Term Investment at FVTOCIBondsInterest PayableInvestment Income or LossInterest RevenueInvestments at Amortized Cost | |||
Investments at Amortized CostNo EntryInterest ReceivableLong-Term Investment at FVTOCIBondsShort-Term Investment at ACBondsCashInvestment Income or LossInterest PayableShort-Term Investment at FVTPLBondsInterest Revenue | |||
(To accrue interest revenue.) |
Show the financial presentation of the bonds for Marin on December 31, 2021. (Round answers to 0 decimal places, e.g. 5,276.)
MARIN INC. Partial Balance Sheet December 31, 2021Year Ended December 31, 2021Quarter Ended December 31, 2021 | ||
Intangible AssetsShort-Term InvestmentsCurrent AssetsProperty, Plant and EquipmentNon-Current Assets | ||
Investment Income or LossLong-Term Investment at FVTOCIBondsInterest ReceivableInterest PayableShort-Term Investment at FVTPLBondsShort-Term Investment at ACBondsCashInvestments at Amortized Cost | $ |
Prepare the entry to record the receipt of interest on January 1, 2022. (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.)
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