Insurance companies and pension plans hold large quantities of bond investments. Discount Insurance Corp. purchased $2,100,000 of
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Requirements
1. Journalize Discount’s purchase of the bonds as a long-term investment on January 1, 2012, (to be held to maturity), receipt of cash interest, and amortization of the bond investment at July 1, 2012. The straight-line method is appropriate for amortizing the bond investment.
2. Journalize the accrual of interest receivable and amortization of premium on October 31, 2012 (round the answer to the nearest whole number).
3. Show all financial statement effects of this long-term bond investment on Discount Insurance Corp.’s balance sheet and income statement at October 31, 2012.
Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
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Related Book For
Financial accounting
ISBN: 978-0132751124
9th edition
Authors: Walter T. Harrison Jr., Charles T. Horngren, C. William Thom
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