On July 1, 2020, West Company purchased for cash, ten $10,000 bonds of North Corporation at...

 

  
 

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On July 1, 2020, West Company purchased for cash, ten $10,000 bonds of North Corporation at a market rate of 6%. The bonds pay 5% interest, payable on a semiannual basis each july 1 and January 1, and mature on July 1, 2023. The bonds are classified as trading securities. The annual reporting period ends December 31. Assume the effective interest method of amortization of any discounts or premiums. Ignore income taxes. Amortization Schedule Journal Entries in 2020 Journal Entries in 2021 a. Prepare a bond amortization schedule for the life of the bonds using the effective interest method. Note Round each amount entered into the schedule to the nearest whole dollar. Use the rounded amount for later calculations in the schedule. Adjust market interest in the final year of the bond tem for any net rounding difference. Stated Market Discount Bond Date Interest Interest Amortization Amortized Cost Jul. 1, 2020 Jan. 1, 2021 $ Jul. 1, 2021 0. Jan 1, 2022 Jul. 1, 2022 Jan. 1, 2023 Jul. 1. 2023 Total OS Check lo Recording Entries for TS-Effective Interest Method Adjust FVA at Year-End On July 1, 2020, West Company purchased for cash, ten $10,000 bonds of North Corporation at a market rate of 6%, The bonds pay 5% interest, payable on a semiannual basis each July 1 and January 1, and mature on July 1, 2023. The bonds are classified as trading securities. The annual reporting period ends December 31. Assume the effective interest method of amortization of any discounts or premiums. Ignore income taxes. Amortization Schedule Journal Entries in 2020 Journal Entries in 2021 b. Record the entry for the purchase of the bonds by West Company on july 1, 2020. c. Record the adjusting entries by West Company on December 31, 2020 to accrue interest revenue and record the unrealized gain or loss. The fair value of the bonds on December 31, 2020, was $99,600. Note: List multiple debits or credits (when applicable) in alphabetical order. Note: Round each amount to the nearest whole dollar, Date Account Name Dr. Cr. b. Jul. 1, 2020 C Dec. 31, 2020 To accrue.interest.revenue Dec. 31, 2020 To record unrealized gain or loss Check Recording Entries for TS-Effective Interest Method Adjust FVA at Year-End On July 1, 2020, West Company purchased for cash, ten $10,000 bonds of North Corporation at a market rate of 6%. The bonds pay 5% interest, payable on a semiannual basis each July 1 and January 1, and mature on July 1, 2023. The bonds are classified as trading securities. The annual reporting period ends December 31. Assume the effective interest method of amortization of any discounts or premiums. Ignore income taxes. Amortization Schedule Journal Entries in 2020 Journal Entries in 2021 d. Record the receipt of interest on January 1, 2021. e. Record the sale of all of the bonds on January 2, 2021, for $99,600. f. Record the adjustment to the Fair Value Adjustment account on December 31, 2021, assuming no additional TS investments. Note: List multiple debits or credits (when applicable) in alphabetical order. Note: Round each amount to the nearest whole dollar. Date Account Name Dr. Cr. d. Jan. 1, 2021 10 e. Jan. 2, 2021 fDec. 31, 2021 Check On July 1, 2020, West Company purchased for cash, ten $10,000 bonds of North Corporation at a market rate of 6%. The bonds pay 5% interest, payable on a semiannual basis each july 1 and January 1, and mature on July 1, 2023. The bonds are classified as trading securities. The annual reporting period ends December 31. Assume the effective interest method of amortization of any discounts or premiums. Ignore income taxes. Amortization Schedule Journal Entries in 2020 Journal Entries in 2021 a. Prepare a bond amortization schedule for the life of the bonds using the effective interest method. Note Round each amount entered into the schedule to the nearest whole dollar. Use the rounded amount for later calculations in the schedule. Adjust market interest in the final year of the bond tem for any net rounding difference. Stated Market Discount Bond Date Interest Interest Amortization Amortized Cost Jul. 1, 2020 Jan. 1, 2021 $ Jul. 1, 2021 0. Jan 1, 2022 Jul. 1, 2022 Jan. 1, 2023 Jul. 1. 2023 Total OS Check lo Recording Entries for TS-Effective Interest Method Adjust FVA at Year-End On July 1, 2020, West Company purchased for cash, ten $10,000 bonds of North Corporation at a market rate of 6%, The bonds pay 5% interest, payable on a semiannual basis each July 1 and January 1, and mature on July 1, 2023. The bonds are classified as trading securities. The annual reporting period ends December 31. Assume the effective interest method of amortization of any discounts or premiums. Ignore income taxes. Amortization Schedule Journal Entries in 2020 Journal Entries in 2021 b. Record the entry for the purchase of the bonds by West Company on july 1, 2020. c. Record the adjusting entries by West Company on December 31, 2020 to accrue interest revenue and record the unrealized gain or loss. The fair value of the bonds on December 31, 2020, was $99,600. Note: List multiple debits or credits (when applicable) in alphabetical order. Note: Round each amount to the nearest whole dollar, Date Account Name Dr. Cr. b. Jul. 1, 2020 C Dec. 31, 2020 To accrue.interest.revenue Dec. 31, 2020 To record unrealized gain or loss Check Recording Entries for TS-Effective Interest Method Adjust FVA at Year-End On July 1, 2020, West Company purchased for cash, ten $10,000 bonds of North Corporation at a market rate of 6%. The bonds pay 5% interest, payable on a semiannual basis each July 1 and January 1, and mature on July 1, 2023. The bonds are classified as trading securities. The annual reporting period ends December 31. Assume the effective interest method of amortization of any discounts or premiums. Ignore income taxes. Amortization Schedule Journal Entries in 2020 Journal Entries in 2021 d. Record the receipt of interest on January 1, 2021. e. Record the sale of all of the bonds on January 2, 2021, for $99,600. f. Record the adjustment to the Fair Value Adjustment account on December 31, 2021, assuming no additional TS investments. Note: List multiple debits or credits (when applicable) in alphabetical order. Note: Round each amount to the nearest whole dollar. Date Account Name Dr. Cr. d. Jan. 1, 2021 10 e. Jan. 2, 2021 fDec. 31, 2021 Check