Shyloft Corporation purchased $100,000, 7% bonds of Coyyle Ltd. on 2 July 20X3. Interest is paid 1 July and 1 January. The bonds expire on 30 June 20X13. The market interest rate at the time of purchase was 6.5%. The fair value of the bond is as follows: 31 December 20X3: $101,905 31 December 20X4: $103,320 Scenario A Assume that Shyloft has purchased the bond with the intention to hold it until maturity, but that, if the fair value of the bond increases, Shyloft would consider selling it. Scenario B Assume that Shyloft has purchased the bond with the intention to hold the bond until the fair value improves and then sell it. Scenario C Assume the Shyloft has purchased the bond with the intention to hold it until maturity. Required: Prepare the journal entries for 20X3 and 20X4 for each scenario. Shyloft has a 31 December year-end. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer rating: 100% (QA)

a Scenario A Shyloft intends to hold the bond until maturity but would consider selling it if the fa... View the full answer