Presented below is an amortization schedule related to Spangler Company's 5-year, $100,000 bond with a 7% interest
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Question:
Presented below is an amortization schedule related to Spangler Company's 5-year, $100,000 bond with a 7% interest rate and a 5% yield, purchased on December 31, 2008, for $108,660.
Date | Cash Received | Interest Revenue | Bond Premium | Amortization Carrying Amount of Bonds |
12/31/09 | $108,660 | |||
12/31/10 | $7,000 | $5,433 | $1,567 | $107,093 |
12/31/11 | $7,000 | $5,354 | $1,646 | $105,447 |
12/31/12 | $7,000 | $5,272 | $1,728 | $103,719 |
12/31/13 | $7,000 | $5,186 | $1,814 | $101,905 |
12/31/14 | $7,000 | $5,095 | $1,905 | $100,000 |
The following schedule presents a comparison of the amortized cost and fair value of the bonds at year-end.
12/31/09 | 12/31/10 | 12/31/11 | 12/31/12 | 12/31/13 | |
Amortized cost | $107,093 | $105,447 | $103,719 | $101,905 | $100,000 |
Fair value | $106,500 | $107,500 | $105,650 | $103,000 | $100,000 |
Instructions:
(a) Prepare the journal entry to record the purchase of these bonds on December 31, 2008, assuming the bonds are classified as held-to-maturity securities.
(b) Prepare the journal entry(ies) related to the held-to-maturity bonds for 2019.
(c) Prepare the journal entry(ies) related to the held-to-maturity bonds for 2011.
Related Book For
Intermediate Accounting principles and analysis
ISBN: 978-0471737933
2nd Edition
Authors: Terry d. Warfield, jerry j. weygandt, Donald e. kieso
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