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Presented below is an amortization schedule related to Spangler Companys 5-year, $113,000 bond with a 7% interest rate and a 4% yield, purchased on December
Presented below is an amortization schedule related to Spangler Companys 5-year, $113,000 bond with a 7% interest rate and a 4% yield, purchased on December 31, 2012, for $128,092.
date | cash received | interest revenue | bond premium amortization | carrying amount of bonds |
---|---|---|---|---|
12/31/12 | $128,092 | |||
12/31/13 | $7910 | $5214 | $2786 | 125,306 |
12/31/14 | 7910 | 5012 | 2898 | 122,408 |
12/31/15 | 7910 | 4896 | 3014 | 119,394 |
12/31/16 | 7910 | 4776 | 3134 | 116,260 |
12/31/17 | 7910 | 4650 | 3260 | 113,000 |
The following schedule presents a comparison of the amortized cost and fair value of the bonds at year-end.
12/31/13 | 12/31/14 | 12/31/15 | 12/31/16 | 12/31/17 | |
---|---|---|---|---|---|
Amortized cost | $125,306 | $122,408 | $119,394 | $116,260 | $113,000 |
Fair Value | $124,707 | $124,489 | $121,335 | $117,353 | $113,000 |
(a) | Prepare the journal entry to record the purchase of these bonds on December 31, 2012, assuming the bonds are classified as held-to-maturity securities. | |
(b) | Prepare the journal entry related to the held-to-maturity bonds for 2013. | |
(c) | Prepare the journal entry related to the held-to-maturity bonds for 2015. | |
(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 2013. | |
(f) | Prepare the journal entries related to the available-for-sale bonds for 2015. |
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