On March 31, 2020, Kingpin Corp. paid 98.25 for 4 percent bonds of Claim Limited as an
Question:
On March 31, 2020, Kingpin Corp. paid 98.25 for 4 percent bonds of Claim Limited as an investment. The maturity value of the bonds is $100,000 at September 30, 2024; they pay interest on March 31 and September 30. At December 31, 2020, the bonds’ market value is 99.25. The company plans to hold the bonds until they mature.
Required
1. How should Kingpin Corp. account for the bonds?
2. Using the straight-line method of amortizing the discount, journalize all transactions on the bonds for 2020.
3. Show how the investment would be reported by Kingpin Corp. on the balance sheet at December 31, 2020.
Step by Step Answer:
Horngrens Accounting
ISBN: 9780135359785
11th Canadian Edition Volume 2
Authors: Tracie Miller Nobles, Brenda Mattison, Ella Mae Matsumura, Carol A. Meissner, Jo Ann Johnston, Peter R. Norwood