On July 1, 2024 Biniam Enterprises acquired bonds as an investment with a face value of...

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On July 1, 2024 Biniam Enterprises acquired bonds as an investment with a face value of $240,000,000 and a stated interest rate of 6%. The bonds pay interest semiannually on June 30th and December 31st. The market rate of interest for bonds of similar risk and maturity is 8%. Biniam paid $200,000,000 for the bonds on July 1. The fair value of the bonds on December 31st, 2024 was $210,000. Here is a partial amortization schedule: Date 1-Jul-24 Cash Rec'd Int. Rev. Disc. Amort. Disc. Bal. Carrying Value 40,000,000 200,000,000 31-Dec-24 7,200,000 8,000,000 30-Jun-25 7,200,000 8,032,000 31-Dec-25 7,200,000 8,065,280 30-Jun-26 7,200,000 8,099,891 800,000 39,200,000 200,800,000 832,000 38,368,000 201,632,000 865,280 37,502,720 202,497,280 899,891 36,602,829 31-Dec-26 7,200,000 8,135,887 935,887 35,666,942 203,397,171 204,333,058 1. Prepare the journal entry to record the investment in bonds on July 1, 2024. Biniam intends to hold the bonds until maturity. 2. Prepare the journal entry to record the receipt of interest by Biniam on December 31, 2024 using the effective interest method 3. At what amount will the investment be shown on Biniam's balance sheet on December 31, 2024? 4. If a bond agency downgraded the risk rating of the bonds and that enticed Biniam to sell the investment on January 3, 2025 for a total amount of $190,000,000, how would the sale be recorded on Biniam's books? 5. If the investment is treated as a trading security instead of held to maturity, what is the year end journal entry needed to adjus the value of the investment on December 31, 2024? Assume the entry to record interest on December 31 has been made. 6. At what amount will the trading investment be shown on the balance sheet on December 31, 2024? 7. If a bond agency downgraded the risk of the bonds and Biniam sells the investment on January 3, 2025 for $190,000, how would the sale of the trading security be recorded on Biniam's books? (First adjust to market value, then record the sale in a second entry) On July 1, 2024 Biniam Enterprises acquired bonds as an investment with a face value of $240,000,000 and a stated interest rate of 6%. The bonds pay interest semiannually on June 30th and December 31st. The market rate of interest for bonds of similar risk and maturity is 8%. Biniam paid $200,000,000 for the bonds on July 1. The fair value of the bonds on December 31st, 2024 was $210,000. Here is a partial amortization schedule: Date 1-Jul-24 Cash Rec'd Int. Rev. Disc. Amort. Disc. Bal. Carrying Value 40,000,000 200,000,000 31-Dec-24 7,200,000 8,000,000 30-Jun-25 7,200,000 8,032,000 31-Dec-25 7,200,000 8,065,280 30-Jun-26 7,200,000 8,099,891 800,000 39,200,000 200,800,000 832,000 38,368,000 201,632,000 865,280 37,502,720 202,497,280 899,891 36,602,829 31-Dec-26 7,200,000 8,135,887 935,887 35,666,942 203,397,171 204,333,058 1. Prepare the journal entry to record the investment in bonds on July 1, 2024. Biniam intends to hold the bonds until maturity. 2. Prepare the journal entry to record the receipt of interest by Biniam on December 31, 2024 using the effective interest method 3. At what amount will the investment be shown on Biniam's balance sheet on December 31, 2024? 4. If a bond agency downgraded the risk rating of the bonds and that enticed Biniam to sell the investment on January 3, 2025 for a total amount of $190,000,000, how would the sale be recorded on Biniam's books? 5. If the investment is treated as a trading security instead of held to maturity, what is the year end journal entry needed to adjus the value of the investment on December 31, 2024? Assume the entry to record interest on December 31 has been made. 6. At what amount will the trading investment be shown on the balance sheet on December 31, 2024? 7. If a bond agency downgraded the risk of the bonds and Biniam sells the investment on January 3, 2025 for $190,000, how would the sale of the trading security be recorded on Biniam's books? (First adjust to market value, then record the sale in a second entry)