Exercise 9-5 On January 1, 2020, Flounder Limited paid $505,633.00 for 12% bonds with a maturity value of $470,000. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2020, and mature on January 1, 2025, with interest receivable on December 31 of each year. Flounder applies ASPE using the effective interest method, and has a December 31 year end. Assume that Flounder hopes to make a gain on the bonds as interest rates are expected to fall. Flounder accounts for the bonds at fair value with changes in value taken to net income, and separately recognizes and reports interest income. The fair value of the bonds at December 31 of each year end is as follows: 2020 2021 2022 2023 2024 $502,100.00 $484,100.00 $482,220.00 $476,580.00 $470,000.00 Your answer is correct. Prepare the journal entry at the date of the bond purchase. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts. Round answers to 2 decimal places, e.g. 52.75.) Account Titles and Explanation Debit Credit 505633 TFV-NI Investments i Cash 505633 SHOW LIST OF ACCOUNTS SHOW ANSWER LINK TO TEXT Your answer is partially correct. Try again. Prepare the journal entries to record interest income and interest received and recognition of fair value at December 31, 2020, 2021, and 2022. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts. Round answers to 2 decimal places, e.g. 52.75.) Date Account Titles and Explanation Debit Credit Dec 31, 2020 Cash FV-NI Investments T Interest Income (To record interest collected) 1 Dec 31, 2020 FV-NI Investments Gain on Disposal of Invest | (To record fair value adjustment) Date Account Titles and Explanation Debit Credit Dec 31, 2020 Cash FV-NI Investments Interest Income (To record interest collected) Dec 31, 2020 FV-NI Investments TTGain on Disposal of Invest (To record fair value adjustment) Cash Dec 31, 2021 FV-NI Investments Interest Income (To record interest collected) Dec 31, 20 2021 TTLoss on Disposal of Investi|| FV-NI Investments (To record fair value adjustment) Cash Dec 31, 2022 FV-NI Investments Interest Income (To record interest collected) Dec 31, 20229FV-NI Investments TTGain on Disposal of Invest (To record gain or loss) SHOW LIST OF ACCOUNTS Exercise 9-5 On January 1, 2020, Flounder Limited paid $505,633.00 for 12% bonds with a maturity value of $470,000. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2020, and mature on January 1, 2025, with interest receivable on December 31 of each year. Flounder applies ASPE using the effective interest method, and has a December 31 year end. Assume that Flounder hopes to make a gain on the bonds as interest rates are expected to fall. Flounder accounts for the bonds at fair value with changes in value taken to net income, and separately recognizes and reports interest income. The fair value of the bonds at December 31 of each year end is as follows: 2020 2021 2022 2023 2024 $502,100.00 $484,100.00 $482,220.00 $476,580.00 $470,000.00 Your answer is correct. Prepare the journal entry at the date of the bond purchase. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts. Round answers to 2 decimal places, e.g. 52.75.) Account Titles and Explanation Debit Credit 505633 TFV-NI Investments i Cash 505633 SHOW LIST OF ACCOUNTS SHOW ANSWER LINK TO TEXT Your answer is partially correct. Try again. Prepare the journal entries to record interest income and interest received and recognition of fair value at December 31, 2020, 2021, and 2022. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts. Round answers to 2 decimal places, e.g. 52.75.) Date Account Titles and Explanation Debit Credit Dec 31, 2020 Cash FV-NI Investments T Interest Income (To record interest collected) 1 Dec 31, 2020 FV-NI Investments Gain on Disposal of Invest | (To record fair value adjustment) Date Account Titles and Explanation Debit Credit Dec 31, 2020 Cash FV-NI Investments Interest Income (To record interest collected) Dec 31, 2020 FV-NI Investments TTGain on Disposal of Invest (To record fair value adjustment) Cash Dec 31, 2021 FV-NI Investments Interest Income (To record interest collected) Dec 31, 20 2021 TTLoss on Disposal of Investi|| FV-NI Investments (To record fair value adjustment) Cash Dec 31, 2022 FV-NI Investments Interest Income (To record interest collected) Dec 31, 20229FV-NI Investments TTGain on Disposal of Invest (To record gain or loss) SHOW LIST OF ACCOUNTS
