Question
On July 1, 2021 Bentley Company paid $192,980 for 4-year, 5% Citigroup bonds with a face value of $200,000. The market rate of interest for
On July 1, 2021 Bentley Company paid $192,980 for 4-year, 5% Citigroup bonds with a face value of
$200,000. The market rate of interest for bonds of similar structure and risk was 6%. Citigroup bonds pay interest semi-annually each June 30 and December 31. Bentley classified the investment as trading securities. On December 31, 2021 the fair value of the bonds held by Bentley was $190,000. On July 1, 2022 Bentley sold the bonds for $195,000.
Bentleys journal entries
1. Purchase on July 1, 2021
2. Show the amortization table up to and including December 31, 2022
| Date | Interest payment | Interest revenue | Amortized | Carrying value |
| 07/01/21 | ||||
| 12/31/21 | ||||
| 06/30/22 |
3. Entries related to these bonds on December 31, 2021
a) Receipt of the first interest payment on December 31, 2021
b) Adjustment to fair value at December 31, 2021
4. Sale of bonds on July 1, 2022
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Fundamentals of corporate finance
Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan
10th edition
978-1260013955, 78034639, 978-0078034633
