On January 1. 2020, Skysong Company purchased 6% bonds, having a maturity value of S620,000 for...

Transcribed Image Text:

On January 1. 2020, Skysong Company purchased 6% bonds, having a maturity value of S620,000 for $535,740. The bonds provide the bondholders with a 8% yield. They are dated January 1, 2020, and mature January 1, 2027, with interest paid on June 30 and December 31 of each year. Skysong Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified as available-for-sale category. The fair value of the bonds at December 31 of each year-end is as follows. 2020 $537,000 2023 $557,000 2021 $532,000 2024 $577,000 2022 $527.000 (a) Prepare the journal entry at the date of the bond purchase. (b) Prepare the journal entries to record the interest revenue and recognition of fair value for 2020. (c) Prepare the journal entry to record the recognition of fair value for 2021. (Round answers to 2 decimal places, eg 2,525.25. Credit account titles are automatically indented when 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.) No. Date Account Titles and Explanation Debit Credit (a) Jan. 1. 2020 (a) Jan. 1.2020 (b) (To record interest received) (To record fair value adjustment) (c) Dec. 31, 2021 v On January 1. 2020, Skysong Company purchased 6% bonds, having a maturity value of S620,000 for $535,740. The bonds provide the bondholders with a 8% yield. They are dated January 1, 2020, and mature January 1, 2027, with interest paid on June 30 and December 31 of each year. Skysong Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified as available-for-sale category. The fair value of the bonds at December 31 of each year-end is as follows. 2020 $537,000 2023 $557,000 2021 $532,000 2024 $577,000 2022 $527.000 (a) Prepare the journal entry at the date of the bond purchase. (b) Prepare the journal entries to record the interest revenue and recognition of fair value for 2020. (c) Prepare the journal entry to record the recognition of fair value for 2021. (Round answers to 2 decimal places, eg 2,525.25. Credit account titles are automatically indented when 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.) No. Date Account Titles and Explanation Debit Credit (a) Jan. 1. 2020 (a) Jan. 1.2020 (b) (To record interest received) (To record fair value adjustment) (c) Dec. 31, 2021 v

Answer rating: 100% (QA)

dee 312020 18600 2154278 294278 5451238 Anwer Jounnal entries NO Panticular Debt fnvesfments Debit C... View the full answer