On September I Louisa Ltd purchased 80 000 of five year 9
On September I, Louisa Ltd. purchased $80,000 of five-year, 9% bonds for $74,086, resulting in an effective (yield) rate of 11%. The bonds pay interest each March I and September I. Louisa Ltd. applies ASPE, accounts for the investment under the amortized cost approach using the effective interest accounting policy, and has a December 31 year end. The following March I, after receiving the semi-annual interest on the bonds, Louisa sells the bonds for $75,100. Prepare Louisa's journal entries for
(a) The purchase of the investment,
(b) Any adjusting entry(ies) needed at December 31,
(c) The receipt of interest on March I, and
(d) The sale of the bond investment on March I. Round an10unts to the nearest dollar.
Membership TRY NOW
  • Access to 800,000+ Textbook Solutions
  • Ask any question from 24/7 available
  • Live Video Consultation with Tutors
  • 50,000+ Answers by Tutors
Relevant Tutors available to help