Financial institutions such as insurance companies and pension plans hold large quantities of bond investments. Suppose Meridian

Question:

Financial institutions such as insurance companies and pension plans hold large quantities of bond investments. Suppose Meridian Credit Union purchases $2,000,000 of 3.0 percent bonds of the Province of Manitoba at 105 on January 1, 2017. These bonds pay interest on January 1 and July 1 each year. They mature on January 1, 2027. Meridian plans to hold the bonds to maturity. Disregard commissions.
Required
1. Journalize Meridian's purchase of the bonds as a long-term investment on January 1, 2017, receipt of cash interest and amortization of premium on July 1, 2017, and accrual of interest revenue and amortization of premium at October 31, 2017, the fiscal year end. Assume the straight-line method is appropriate for amortizing the premium as there is no material difference from the effective-interest method.
2. Calculate the book value of the investment in the Province of Manitoba bonds at October 31, 2017.
Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Horngrens Accounting

ISBN: 978-0133855388

10th Canadian edition Volume 2

Authors: Tracie L. Miller Nobles, Brenda L. Mattison, Ella Mae Matsumura, Carol A. Meissner, Jo Ann L. Johnston, Peter R. Norwood

Question Posted: