Question
Presented below is an amortization schedule related to Crane Companys 5-year, $110,000 bond with a 7% interest rate and a 4% yield, purchased on December
Presented below is an amortization schedule related to Crane Companys 5-year, $110,000 bond with a 7% interest rate and a 4% yield, purchased on December 31, 2018, for $124,691.
Date | Cash Received | Interest Revenue | Bond Premium Amortization | Carrying Amount of Bonds | ||||
---|---|---|---|---|---|---|---|---|
12/31/18 | $124,691 | |||||||
12/31/19 | $7,700 | $4,988 | $2,712 | 121,979 | ||||
12/31/20 | 7,700 | 4,879 | 2,821 | 119,158 | ||||
12/31/21 | 7,700 | 4,766 | 2,934 | 116,224 | ||||
12/31/22 | 7,700 | 4,649 | 3,051 | 113,173 | ||||
12/31/23 | 7,700 | 4,527 | 3,173 | 110,000 |
The following schedule presents a comparison of the amortized cost and fair value of the bonds at year-end.
12/31/19 | 12/31/20 | 12/31/21 | 12/31/22 | 12/31/23 | ||||||
---|---|---|---|---|---|---|---|---|---|---|
Amortized cost | $121,979 | $119,158 | $116,224 | $113,173 | $110,000 | |||||
Fair value | $121,400 | $121,000 | $118,000 | $114,300 | $110,000 |
(a) | Prepare the journal entry to record the purchase of these bonds on December 31, 2018, assuming the bonds are classified as held-to-maturity securities. | |
(b) | Prepare the journal entry related to the held-to-maturity bonds for 2019. | |
(c) | Prepare the journal entry related to the held-to-maturity bonds for 2021. | |
(d) | Prepare the journal entry to record the purchase of these bonds, assuming they are classified as available-for-sale. | |
(e) | Prepare the journal entries related to the available-for-sale bonds for 2019. | |
(f) | Prepare the journal entries related to the available-for-sale bonds for 2021. |
(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 0 for the amounts.)
No. | Date | Account Titles and Explanation | Debit | Credit |
---|---|---|---|---|
(a) | choose a transaction date |
enter an account title | enter a debit amount | enter a credit amount | ||
---|---|---|---|---|
enter an account title | enter a debit amount | enter a credit amount | ||
(b) | choose a transaction date |
enter an account title | enter a debit amount | enter a credit amount | ||
---|---|---|---|---|
enter an account title | enter a debit amount | enter a credit amount | ||
enter an account title | enter a debit amount | enter a credit amount | ||
(c) | choose a transaction date |
enter an account title | enter a debit amount | enter a credit amount | ||
---|---|---|---|---|
enter an account title | enter a debit amount | enter a credit amount | ||
enter an account title | enter a debit amount | enter a credit amount | ||
(d) | choose a transaction date |
enter an account title | enter a debit amount | enter a credit amount | ||
---|---|---|---|---|
enter an account title | enter a debit amount | enter a credit amount | ||
(e) | choose a transaction date |
enter an account title to record interest revenue | enter a debit amount | enter a credit amount | ||
---|---|---|---|---|
enter an account title to record interest revenue | enter a debit amount | enter a credit amount | ||
enter an account title to record interest revenue | enter a debit amount | enter a credit amount | ||
(To record interest revenue.) | ||||
enter an account title to record adjustment | enter a debit amount | enter a credit amount | ||
enter an account title to record adjustment | enter a debit amount | enter a credit amount | ||
(To record adjustment.) | ||||
(f) | choose a transaction date |
enter an account title to record interest revenue | enter a debit amount | enter a credit amount | ||
---|---|---|---|---|
enter an account title to record interest revenue | enter a debit amount | enter a credit amount | ||
enter an account title to record interest revenue | enter a debit amount | enter a credit amount | ||
(To record interest revenue.) | ||||
enter an account title to record adjustment | enter a debit amount | enter a credit amount | ||
enter an account title to record adjustment | enter a debit amount | enter a credit amount | ||
(To record adjustment.) |
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