On January 1, 2022, Sarasota and Lois Company purchased 12% bonds having a maturity valueof $324,000 for $348, 564.30. The bonds provide the bondholders with a 10% yield. They aredated January 1, 2022, and mature on January 1, 2027, with interest receivable on Deecember31 of each year. Sarasota and Lois Company uses the effective interest method to allocateunamortized discount or premium. The bonds are carried at FV - OCI. The fair value of the bondsat December 31 of each year - end is as follows: 2022 $346,000, 2023: $334,000. Prepare thejournal entries to record the interest received and recognition of fair value for 2022.

The bonds have been purchased at a premium as the purchase value is greater than the maturity value.…

Answered: sota and Lois Company purchased 12%…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 1MC

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On January 1, 2018, Wawatosa Inc. issued 5-year bonds with a face value of $200,000 and a stated interest rate of 12% payable semi-annually on July 1 and January 1. The bonds were sold to yield 10%. Assuming the bonds were sold at 107.732, what is the selling price of the bonds? Were they issued at a discount or a premium?
Bats Corporation issued 800,000 of 12% face value bonds for 851,705.70. The bonds were dated and issued on April 1, 2019, are due March 31, 2023, and pay interest semiannually on September 30 and March 31. Bats sold the bonds to yield 10%. Required: 1. Prepare a bond interest expense and premium amortization schedule using the straight-line method. 2. Prepare a bond interest expense and premium amortization schedule using the effective interest method. 3. Prepare any adjusting entries for the end of the fiscal year, December 31, 2019, using the: a. straight-line method of amortization b. effective interest method of amortization 4. Assume the company retires the bonds on June 30, 2020, at 103 plus accrued interest. Prepare the journal entries to record the bond retirement using the: a. straight-line method of amortization b. effective interest method of amortization
Chung Inc. issued $50,000 of 3-year bonds on January 1, 2018, with a stated rate of 4% and a market rate of 4%. The bonds paid interest semi-annually on June 30 and Dec. 31. How much money did the company receive when the bonds were issued? The bonds would be quoted at what rate?
Volunteer Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July 1, 2018 and received $540,000. Interest is payable annually. The premium is amortized using the straightline method. Prepare journal entries for the following transactions. A. July 1, 2018: entry to record issuing the bonds B. June 30, 2019: entry to record payment of interest to bondholders C. June 30, 2019: entry to record amortization of premium D. June 30, 2020: entry to record payment of interest to bondholders E. June 30, 2020: entry to record amortization of premium
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sota and Lois Company purchased 12% bonds h 30. The bonds provide the bondholders with a nd mature on January 1, 2027, with interest rece and Lois Company uses the effective interest me remium. The bonds are carried at FV- OCI. The ear-end is as follows: 2022 $346.000. 2023: $31