On July 1, 2021 Bentley Company paid $192,980 for 4-year, 5% Citigroup bonds with a face value
Question:
On July 1, 2021 Bentley Company paid $192,980 for 4-year, 5% Citigroup bonds with a face value of $200,000. The market rate of interest for bonds of similar structure and risk was 6%. Citigroup bonds pay interest semi-annually each June 30 and December 31. Bentley classified the investment as trading securities. On December 31, 2021 the fair value of the bonds held by Bentley was $190,000. On July 1, 2022 Bentley sold the bonds for $195,000.
Bentley’s journal entries
1. Purchase on July 1, 2021
2. Show the amortization table up to and including December 31, 2022
Date | Interest payment | Interest revenue | Amortized | Carrying value |
07/01/21 | ||||
12/31/21 | ||||
06/30/22 |
3. Entries related to these bonds on December 31, 2021
a) Receipt of the first interest payment on December 31, 2021
b) Adjustment to fair value at December 31, 2021
4. Sale of bonds on July 1, 2022
Expert Answer:
1 Journal entry on July 1 2021 Date Account titles and explanation Debit Credit July 1 2021 In... View the full answer
Intermediate Accounting
ISBN: 978-0324592375
17th Edition
Authors: James D. Stice, Earl K. Stice, Fred Skousen
