On January 1, 2018, Ambrosia Corp. purchased 7% 5-year bonds with face value of $600,000. The...
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On January 1, 2018, Ambrosia Corp. purchased 7% 5-year bonds with face value of $600,000. The bonds were dated January 1, 2018, and would mature on January 1, 2023. The bonds would pay interest twice a year, on July 1 and January 1. Ambrosia paid $652,513 for the bonds to yield 5% (market rate). Ambrosia accounted for the bonds at FV-OCI. Ambrosia's fiscal year end was December 31. Fair values of the bonds on December 31, 2018 and 2019 respectively were: 2018 $625,648 2019 $699,408 Prepare a table to show interest income, interest received and premium or discount amortization for the bonds for the first 3 years. a. Cash Received Interest Income Premium/discount FV-OCI Investment amortization b. Prepare all necessary journal entries in 2018, to record interest income and an adjustment to fair value. 1 c. The bonds were sold on July 1, 2020 at 112, immediately after collecting interest due on that date. Prepare all necessary journal entries for the sale of the bonds. On January 1, 2018, Ambrosia Corp. purchased 7% 5-year bonds with face value of $600,000. The bonds were dated January 1, 2018, and would mature on January 1, 2023. The bonds would pay interest twice a year, on July 1 and January 1. Ambrosia paid $652,513 for the bonds to yield 5% (market rate). Ambrosia accounted for the bonds at FV-OCI. Ambrosia's fiscal year end was December 31. Fair values of the bonds on December 31, 2018 and 2019 respectively were: 2018 $625,648 2019 $699,408 Prepare a table to show interest income, interest received and premium or discount amortization for the bonds for the first 3 years. a. Cash Received Interest Income Premium/discount FV-OCI Investment amortization b. Prepare all necessary journal entries in 2018, to record interest income and an adjustment to fair value. 1 c. The bonds were sold on July 1, 2020 at 112, immediately after collecting interest due on that date. Prepare all necessary journal entries for the sale of the bonds.
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Related Book For
Intermediate Accounting
ISBN: 978-0078025839
9th edition
Authors: J. David Spiceland, James Sepe , Mark Nelson , Wayne Thomas
Posted Date:
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