Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please show all steps on how every number is coming from. On January 1, 2018, Ambrosia Corp. purchased 7% 5-year bonds with face value of

Please show all steps on how every number is coming from.

On January 1, 2018, Ambrosia Corp. purchased 7% 5-year bonds with face value of $600,000. The bonds were dated January 1, 2018, and would mature on January 1, 2023. The bonds would pay interest twice a year, on July 1 and January 1. Ambrosia paid $652,513 for the bonds to yield 5% (market rate). Ambrosia accounted for the bonds at FV-OCI. Ambrosias fiscal year end was December 31. Fair values of the bonds on December 31, 2018 and 2019 respectively were:

2018 $625,648

2019 $699,408

a. Prepare a table to show interest income, interest received and premium or discount amortization for the bonds for the first 3 years.

Cash recieved Interest income Premium/discount amortization FV-OCI investment

b. Prepare all necessary journal entries in 2018, to record interest income and an adjustment to fair value.

c. The bonds were sold on July 1, 2020 at 112, immediately after collecting interest due on that date. Prepare all necessary journal entries for the sale of the bonds.

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

Essentials Of Internal Auditing CIA Part 1 2021

Authors: Muhammad Zain

1st Edition

B09B36MRH2, 979-8542949130

More Books

Students also viewed these Accounting questions