On December 31, 2017, Yale Corp. purchased 10-year, 6% Princeton Corp. bonds with a face value...

 

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On December 31, 2017, Yale Corp. purchased 10-year, 6% Princeton Corp. bonds with a face value of $400,000; the bonds were purchased at a price to yield an effective rate of 8% and are classified as available-for-sale securities. The fair value of the bonds was S332,000 on 12/31/18 and S348,000 on 12/31/19. (a) Prepare the Yale Corp. journal entry for the purchase of the bonds. (b) Complete the partial amortization table below. Carrying Value of Bonds Cash Interest Revenue Discount Amortiz. Received 12.31.17 12.31.18 12.31.19 Prepare all Yale Corp.'s journal entries required at 12.31.18. (c) Prepare all Yale Corp.'s journal entries required at 12.31.19. (d) Now assume that the bonds were classified as held-to-maturity when purchased. Explain how the year-end journal entries for 2018 would differ from your answer above. On December 31, 2017, Yale Corp. purchased 10-year, 6% Princeton Corp. bonds with a face value of $400,000; the bonds were purchased at a price to yield an effective rate of 8% and are classified as available-for-sale securities. The fair value of the bonds was S332,000 on 12/31/18 and S348,000 on 12/31/19. (a) Prepare the Yale Corp. journal entry for the purchase of the bonds. (b) Complete the partial amortization table below. Carrying Value of Bonds Cash Interest Revenue Discount Amortiz. Received 12.31.17 12.31.18 12.31.19 Prepare all Yale Corp.'s journal entries required at 12.31.18. (c) Prepare all Yale Corp.'s journal entries required at 12.31.19. (d) Now assume that the bonds were classified as held-to-maturity when purchased. Explain how the year-end journal entries for 2018 would differ from your answer above.