On January 1, 2024, Parker Inc. purchased $100,000 of Amy Company bonds at a discount of...

 

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On January 1, 2024, Parker Inc. purchased $100,000 of Amy Company bonds at a discount of $5,000. The Amy bonds pay 6% interest but were purchased when the market interest rate was 7% for bonds of similar risk and maturity. The bonds pay interest semiannually on June 30 and December 31 of each year. On December 31, 2024, the bonds have a fair value of $90,000. 1. Assume Parker accounts for the bonds as a held-to-maturity investment and uses the effective interest method. How would Parker report these bonds on its 2024 Balance Sheet, Income Statement and Statement of Cashflow? 2. Continuing from question 1, assume Parker sold the bonds on January 1, 2025, for $96,000. Please journalize this transaction. 3. Instead, Assume Parker accounts for the bonds as a trading investment and uses the effective interest method. How would Parker report these bonds on its 2024 Balance Sheet, Income Statement and Statement of Cashflow? 4. Continuing from question 3, assume Parker sold the bonds on January 1, 2025, for $96,000. Please journalize this transaction. On January 1, 2024, Parker Inc. purchased $100,000 of Amy Company bonds at a discount of $5,000. The Amy bonds pay 6% interest but were purchased when the market interest rate was 7% for bonds of similar risk and maturity. The bonds pay interest semiannually on June 30 and December 31 of each year. On December 31, 2024, the bonds have a fair value of $90,000. 1. Assume Parker accounts for the bonds as a held-to-maturity investment and uses the effective interest method. How would Parker report these bonds on its 2024 Balance Sheet, Income Statement and Statement of Cashflow? 2. Continuing from question 1, assume Parker sold the bonds on January 1, 2025, for $96,000. Please journalize this transaction. 3. Instead, Assume Parker accounts for the bonds as a trading investment and uses the effective interest method. How would Parker report these bonds on its 2024 Balance Sheet, Income Statement and Statement of Cashflow? 4. Continuing from question 3, assume Parker sold the bonds on January 1, 2025, for $96,000. Please journalize this transaction.

Answer rating: 100% (QA)

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