Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Question 2 Partially correct Mark 0.72 out of 4.00 P Rag question Adjust EVA at Year-End On July 1 of the current year, West Company

image text in transcribed
image text in transcribed
image text in transcribed
Question 2 Partially correct Mark 0.72 out of 4.00 P Rag question Adjust EVA at Year-End On July 1 of the current year, West Company purchased for cash, 8, 510,000 bonds of North Corporation at a market rate of 49. The bonds pay 5% interest, payable on a semiannual basis each July 1 and January 1, and mature in three years on July 1. The bonds are classified as trading securities. The annual reporting period ends December 31. Assume the effective interest method of amortization of any discounts or premiums. Ignore income taxes. Note: When answering the following questions, round answers to the nearest whole dollar. Amortization Schedule Journal Entries in Year 1 Journal Entries in Year 2 a. Prepare a bond amortization schedule for the life of the bonds using the effective interest method. Date Stated Interest Jul. 1. Year 1 Jan. 1. Year 2 5 Jul. 1. Year 2 Jan. 1. Year 3 Jul. 1. Year 3 Jan, 1. Year 4 Jul. 1. Year 4 2.000 5 2.000 2,000 2,000 2.000 2.000 Market Premium Bond Interest Amortization Amortized Cost $ 77,970 X 3.200 X 5 502 X 117,252 % 3.518 x 518 x 117.770 % 3.533 x 533 x 118.303 X 3.549 x 549 X 118,852 x 3,566 x 566 X 119.417 x 3,583 x 583 X 80.000 Check Partially correct Marks for this submission: 0.7274.00. On July 1 of the current year, West Company purchased for cash, 8, 510,000 bonds of North Corporation at a market rate of 49. The bonds pay 54 interest, payable on a semiannual basis each July 1 and January 1, and mature in three years on July 1. The bonds are classified as trading securities. The annual reporting period ends December 31. Assume the effective interest method of amortization of any discounts or premiums. Ignore Income taxes. Note: When answering the following questions, round answers to the nearest whole dollar Amortization Schedule Journal Entries in Year 1 Journal Entries in Year 2 b. Record the entry for the purchase of the bonds by West Company on July 1 Account Name Debit Date jul. 1. Yeart Credit O OX 0 0.X To record investment purchase c. Record the adjusting entries by West Company on December 31 to accrue interest revenue and record the unrealized gain or loss. The fair value of the bonds on that date was $83,000, Account Name Debit Credit Date Dec 31, Year 1 OX OX OX 0 To accrue interest revenue Dec. 31. Year 1 0X 0 0 OX To record unrealizes sain or loss. Check Partially correct Marks for this submission: 0.72/4.00

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

Computer Fraud Casebook The Bytes That Bite

Authors: Joseph T. Wells

1st Edition

0470278145, 978-0470278147

More Books

Students also viewed these Accounting questions

Question

5. Describe the visual representations, or models, of communication

Answered: 1 week ago