Three Independent situations follow: 1. Day One Ltd. (DOL) issued $10,000,000 in stripped (zero-coupon) bonds that mature

Three Independent situations follow:

  

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1. Day One Ltd. (DOL) issued $10,000,000 in stripped (zero-coupon) bonds that mature in 6 years. The market rate of interest for bonds of a similar nature is 1.2% compounded monthly. Five and one-half years after issue, when the market rate was 3.6%, DOL repurchased $4,000,000 of the bonds on the open market. DOL accrues interest monthly. Bonds are carried at amortized cost. 2. Sums Up Accountants sold $9,000,000 of five-year bonds that pay the then-current market rate of interest of 9% annually on December 31. The bonds are dated January 1, 2018, but were not issued until February 1, 2018. Sums Up's year-end is December 31. Sums Up has adopted a policy of crediting interest expense for the interest accrued up to the date of sale. 3. On January 1, 2020, The Nutty Professor Corp. (TNPC) sold $6,000,000 of three-year, 10% bonds priced to yield 8%. Interest is payable on June 30 and December 31 each year. 1. Day One Ltd. (DOL) issued $10,000,000 in stripped (zero-coupon) bonds that mature in 6 years. The market rate of interest for bonds of a similar nature is 1.2% compounded monthly. Five and one-half years after issue, when the market rate was 3.6%, DOL repurchased $4,000,000 of the bonds on the open market. DOL accrues interest monthly. Bonds are carried at amortized cost. 2. Sums Up Accountants sold $9,000,000 of five-year bonds that pay the then-current market rate of interest of 9% annually on December 31. The bonds are dated January 1, 2018, but were not issued until February 1, 2018. Sums Up's year-end is December 31. Sums Up has adopted a policy of crediting interest expense for the interest accrued up to the date of sale. 3. On January 1, 2020, The Nutty Professor Corp. (TNPC) sold $6,000,000 of three-year, 10% bonds priced to yield 8%. Interest is payable on June 30 and December 31 each year.

Answer rating: 100% (QA)

a i The Nutty Professor Corp Journal Entry Date Accounts Debit Credit 112020 Cash 6000000 Bonds Paya... View the full answer