Question
On July 1, 2020 Kedo Corp. acquired 500 of Splank Corp.s $1,000 bonds which pay semiannual interest at 6% on June 30 and December 31.
On July 1, 2020 Kedo Corp. acquired 500 of Splank Corp.s $1,000 bonds which pay semiannual interest at 6% on June 30 and December 31. Kedo incurred a brokerage fee of $1,400. Kedo classified the investment at Fair Value Through Profit and Loss (FVNI). The bonds had originally been issued by Splank Corp on January 1, 2020. The bonds mature on December 31, 2039. The Market yield to maturity rate at the date of purchase was 4%. At December 31, 2020 the market yield was 4.4%, resulting in a fair value of $602,293. On November 30, 2021, Kedos management decided to sell all of the bonds at 104. Kedo incurred a $1,100 brokerage fee. Required: Please clearly label each required with a), b), c), etc. a) Calculate the premium or discount on July 1, 2020 when Kedo purchased the bonds. b) Prepare a bond amortization table. Record the following transactions (prepare journal entries): c) The purchase of the bonds on July 1, 2020 d) The interest payment received on December 31, 2020 e) The remeasurement of the bonds at December 31, 2020 f) The interest payment received on June 30, 2021
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