Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

On January 1, 2025, Pharoah Company purchased $370,000,8% bonds of Aguirre Co, for $341,429. The bonds were purchased to yield 10% interest. Interest is payable

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
On January 1, 2025, Pharoah Company purchased $370,000,8% bonds of Aguirre Co, for $341,429. The bonds were purchased to yield 10% interest. Interest is payable semiannually on July 1 and January 1 . The bonds mature on January 1, 2030. Pharoah Compa uses the effective-interest method to amortize discount or premium. On January 1, 2027, Pharoah Company sold the bonds for $343,034 after receiving interest to meet its liquidity needs. Prepare the journal entry to record the purchase of bonds on January 1. Assume that the bonds are classified as available-for-sale. (List debit entry before credit entry. Credit account titles are outomatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter Ofor the amounts.) Schedule of Interest Revenue and Bond Discount Amortization-Effective-Interest Method 8% Bonds Purchased to Yield 10% 1/1/27 14.800 17,429 2.629 7/1/27 14.800 17.561 2761 1/1/28 2899 7/1/28 3044 1/1/29 3.196 7/1/29 3,356 1/1/30 Prepare the journal entries to record the semiannual interest on July 1,2025, and December 31, 2025. d) If the fair value of Aguirre bonds is $345,034 on December 31, 2026, prepare the necessary adjusting entry. (Assume the fair value adjustment balance on December 31,2025 , is a debit of $3.257.) (e) Prepare the journal entry to record the sale of the bonds on January 1,2027. List all debit entries before credit entries, Credit account titles are automatically indented when 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 Odecimal places, es. 1,225. Record journal entries in the order presented in the problem.) (2) Dec31,2025 Cash Debt Irvestments Interest Revenue (d) Dec31,2026 (e) Jan. 1,2027 Cash Loss on Sale of Itwestments Debt Investments

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

Recommended Textbook for

Auditing IT Infrastructures For Compliance

Authors: Robert Johnson, Marty Weiss, Michael G. Solomon

3rd Edition

1284236609, 9781284236606

More Books

Students also viewed these Accounting questions

Question

7. What are the main provisions of the FMLA?pg 87

Answered: 1 week ago

Question

7. What are the main provisions of the FMLA?

Answered: 1 week ago