On January 1, 2017, COYOTE Company purchased 7%, 10-year bonds with a face value of $2,000,000 at
Question:
On January 1, 2017, COYOTE Company purchased 7%, 10-year bonds with a face value of $2,000,000 at $2,100,000. The interests will be paid annually on December 31 of each year. COYOTE uses the straight-line method to amortize the premium/discount on bonds and the calendar year as its fiscal period. The fair market values of the bonds were $1, 990,000 on 12/31/2017 and $2,040,000 on 12/31/2018. COYOTE sold the bonds for $2,090,000 on 1/1/2019. Instructions: Presume that COYOTE classified the bond investments as available for sales security.
Prepare any necessary journal entries for
a.the acquisition of the bonds on 1-1-2017,
b.the receipts of interests and premium amortizations on 12/31/2017 and 12/31/2018,
c.any unrealized holding gain or loss as of 12/31/2017 and 12/31/2018,
d.the sales of the bond investment on 1/1/2019.
Intermediate Accounting
ISBN: 978-0324592375
17th Edition
Authors: James D. Stice, Earl K. Stice, Fred Skousen