Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Question# 0 1 : On January 1 , 2 0 1 3 , THD Company purchased 1 2 % bonds having a maturity value of

Question#01:
On January 1,2013, THD Company purchased 12% bonds having a maturity value of Tk.
300,000. The bonds provide the bondholders with a 10% yield. They are dated January 1,2013,
and mature January 1,2018, with interest receivable December 31 of each year. THD Company
uses the effective-interest method to allocate unamortized discount or premium. The securities
are classified as available-for-sale. The fair value of the bonds at December 31 of each year-end
is as follows.
2013
2015
2017
300,000
2014
Required:
(a) Indicate whether the bonds were purchased at a discount or at a premium.
(b) Prepare the journal entry at the date of the bond purchase.
(c) Prepare the journal entries to record the interest received for 2013.
(d) Prepare the adjusting entry to record the bonds at fair value at December 31,2013. The
Fair Value Adjustment account has a debit balance of Tk.1,000 prior to adjustment
(e) Prepare the journal entry to record the recognition of fair value for 2014
image text in transcribed

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

Management Accounting For Business

Authors: Colin Drury, Mike Tayles

8th Edition

1473778808, 978-1473778801

More Books

Students also viewed these Accounting questions

Question

Give the reliability function of the structure of Exercise 8.

Answered: 1 week ago