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Pullen Company purchased fifty $1,000 face-value, 10-year, 9.5% bonds on January 1, 2018 (dated 01/01/18). The bonds pay interest annually on December 31. If the
- Pullen Company purchased fifty $1,000 face-value, 10-year, 9.5% bonds on January 1, 2018 (dated 01/01/18). The bonds pay interest annually on December 31. If the yield on the bonds is 11%, what amount did Pullen pay for them on January 1, 2018? Please record the purchase of the bonds.
- If Pullen classifies them as available-for-sale securities and amortizes them using the effective-interest method, what will be the balance in the Available-for-sale securities account as of January 1, 2021? (Please attach an Excel spreadsheet showing the table to compute the amortization)
- Assume the following fair values for the end of each year:
12/31/18 = $ 47,100
12/31/19 = $ 47,900
12/31/20 = $ 46,500
Assuming all losses are temporary, please show the journal entries to record the change in fair values and the amortization of interest on the bonds.
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