The Following information relates to the debt securities investments of Wildcat Company. 1- On 2/1, the company
Question:
The Following information relates to the debt securities investments of Wildcat Company.
1- On 2/1, the company purchased 10% bonds of Gibbons Co. having a par value of $300,000 at 100 plus accrued interest. Interest in payable April 1 and October 1.
2-On April 1, semiannual interest is received.
3-On July 1, 9% bonds of Sampson Inc, were purchased. These bonds with a par value of $200,000 were purchased at 100 plus accrued interest. Interest dates are June and December 1.
4-On September 1, bonds with a par value of $60,000, purchased on Feb 1, are sold at 99 plus accrued interest.
5-On October 1, semiannual is received.
6-On December 1, semiannual is received.
7-On December 31, the fair value of bonds purchased Feb 1 and July 1 are 95 and 93, respectively.
Questions:
a-Prepare any journal entries you consider necessary, including year-end entries (December 31), assuming these are available-for-sale securities.
b-If Wildcat classified these as held-to-maturity securities, explain how the journal entries would differ from those in part (a).
Par ValuePar value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...
Step by Step Answer:
Intermediate Accounting principles and analysis
ISBN: 978-0471737933
2nd Edition
Authors: Terry d. Warfield, jerry j. weygandt, Donald e. kieso