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Please correct the following answers. On July 1, 2020, Culver Aggregates Ltd. purchased 5% bonds having a maturity value of $75,000 for $77,747. The bonds
Please correct the following answers.
On July 1, 2020, Culver Aggregates Ltd. purchased 5% bonds having a maturity value of $75,000 for $77,747. The bonds provide the bondholders with a 4% yield. The bonds mature four years later, on July 1, 2024, with interest receivable June 30 and December 31 of each year. Culver uses the effective interest method to allocate unamortized discount or premium. The bonds are accounted for using the FV-OCI model with recycling. Culver has a calendar year end. The fair value of the bonds at December 31, 2020 and 2021, was $77,638 and $76,640, respectively. Assume fair value adjustments are recorded at year end only. Immediately after collecting interest on December 31, 2021, the bonds were sold for $76,640. Your answer is partially correct. Try again. Prepare the journal entry at the date of the bond purchase. (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 O for the amounts. Round answers to 0 decimal places, e.g. 5,275.) Date Account Titles and Explanation Debit Credit July 1, 2020 Bond Investment at Amort 77,747 Cash 77,747 Your answer is correct. Prepare a bond amortization schedule to December 31, 2021. (Round answers to 0 decimal places, e.g. 5,275.) Schedule of Interest Revenue and Bond Premium Amortization Effective-Interest Method Cash Received Interest Revenue Premium Amortized Date Amortized Cost of Bonds July 1, 2020 77747 $ Dec. 31, 2020 1875 1555 320 77427 $ $ | June 30, 2021 1875 1549 326 77101 Dec. 31, 2021 1875 1542 333 76768 Your answer is partially correct. Try again. Prepare the entries and year-end entries from December 31, 2020, through to the collection of interest on December 31, 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 o for the amounts. Round answers to O decimal places, e.g. 5,275.) Date Account Titles and Explanation Debit Credit December 31, 2020 V Cash 1875 Bond Investment at An 320 1555 Interest Income (To record collection of interest) Bond Investment at Amort 211 211 Unrealized Gain or Loss (To record fair value adjustment) June 30, 2021 Cash 1875 Bond Investment at Am 326 1549 Interest Income (To record collection of interest) Cash December 31, 2021 V 1875 Bond Investment at Am 333 Interest Income 1542 (To record collection of interest) Your answer is partially correct. Try again. Following the three-step approach, prepare the journal entries for the sale of the bond on December 31, 2021. Include the reclassification of unrealized gains and losses to net income. (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 o for the amounts. Round answers to 0 decimal places, e.g. 5,275.) Account Titles and Explanation Debit Credit Unrealized Gain or Loss - ( 659 X x Bond Investment at An 659 (To record fair value adjustment to date of disposal) Cash 76640 Bond Investment at An 76640 (To record disposal of the bond) Loss on Disposal of Investi 448 Unrealized Gain or Loss 448 (To reclassify accumulated unrealized gains and losses from OCI to net income)Step by Step Solution
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