Question
On January 1, 2021,BuffaloLtd. issued bonds with a maturity value of $5.40million for $5,175,360, when the market rate of interest was7%. The bonds have a
On January 1, 2021,BuffaloLtd. issued bonds with a maturity value of $5.40million for $5,175,360, when the market rate of interest was7%. The bonds have a contractual interest rate of6% and mature on January 1, 2026. Interest on the bonds is payable semi-annually on July 1 and January 1 of each year. On January 1, 2021,SunlandCompany, a public company, purchasedBuffaloLtd. bonds with a maturity value of $1.08million to earn interest. On December 31, 2021, the bonds were trading at97. Both companies' year end is December 31.
Click here to view the factor table. Present Value of 1
Click here to view the factor table. Present Value of an Annuity of 1
(For calculation purposes, use 5 decimal places as displayed in the factor table provided.)
(a)
Correct answer icon
Your answer is correct.
What amount didSunlandCompany pay forBuffaloLtd.'s bonds?(Round answer to 0 decimal places, e.g. 5,275.)
SunlandCompany paid$
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Attempts: 2 of 3 used
(b)
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Your answer is correct.
the journal entry forSunlandCompany (investor) 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. Round answers to 0 decimal places, e.g. 5,275.)
Date
Account Titles and Explanation
Debit
Credit
Jan. 1
Bonds Payable
Interest Payable
Interest Receivable
Interest Revenue
Cash
Gain on Sale of Bonds
Investment Income or Loss
Interest Expense
Investments at Amortized Cost
No Entry
Interest Expense
Interest Receivable
Investment Income or Loss
Gain on Sale of Bonds
Interest Payable
Interest Revenue
No Entry
Bonds Payable
Investments at Amortized Cost
Cash
(To record purchase of investment.)
eTextbook and Media
Assistance Used
Attempts: 2 of 3 used
(c)
bond amortization schedule forSunlandCompany for the first four interest periods.(Round answers to 0 decimal places, e.g. 5,275.)
Bond Discount Amortization Table
Effective Interest Method-Semi-annual Interest Payments
6% Bonds Issued at market rate of7%Date
(A)
Interest Received(B)
Interest Revenue
(C)
Discount Amortization
(D)
Bond Amortized Cost
Jan. 1, 2021
$July 1, 2021
$$$Jan. 1, 2022
July 1, 2022
Jan. 1, 2023
Plz provide calculations for the table
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