Question

Texas company purchased bonds with a total face value 800,000 from Apple Company on Febuary 1,...

Texas company purchased bonds with a total face value 800,000 from Apple Company on Febuary 1, 2018 at 100(quote). The bonds are 8%, $1000 bonds and pay interest every Feb 1. The bonds are a trading security on Texas's books. On December 31, the bonds have a market value reflecting a 97 quote. December 31 is fiscal year end. Present ALL journal entries related to the bond investment required by Texas in 2018

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1
Journal entries:
Date Account Titles and Explanation Debit Credit
2018
Feb 1. Bonds in Apple 800000
Cash 800000
(Bonds purchased)
Dec 31. Interest receivable 58666.67
Interest revenue 58666.67
(800000*8%*11/12)
(Interest for 11 month accrued)
Dec 31. Unrealized loss on trading securities 24000
Bonds in Apple 24000
[800000-(800000/100)*97]
(Change in market value recorded)
Note
When the quote was 100, Bond is $800000
When the quote was 97, Bond is ?
Market value will be (800000/100)*97=$ 776000
Decrease in market value=800000-776000=$ 24000
0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
On January 1, 2018, Hoosier Company purchased $930,000 of 10% bonds at face value. The bond...
On January 1, 2018, Hoosier Company purchased $930,000 of 10% bonds at face value. The bond market value was $980,000 on December 31, 2018. Required: Prepare the appropriate journal entry on December 31, 2018, to properly value the bonds assuming the bonds are classified as: (1.) Trading securities. (2.) Securities available for sale. (3.) Held-to-maturity securities.
On January 1, 2018, Hoosier Company purchased $944,000 of 10% bonds at face value. The bond...
On January 1, 2018, Hoosier Company purchased $944,000 of 10% bonds at face value. The bond market value was $987,000 on December 31, 2018. Required: Prepare the appropriate journal entry on December 31, 2018, to properly value the bonds assuming the bonds are classified as: (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Trading securities. Securities available for sale. Held-to-maturity securities. Record the unrealized holding gain or loss for trading...
Apple Company issues $1,000,000 face value, 6%, 5-year bonds payable on December 31, 2018. Interest is...
Apple Company issues $1,000,000 face value, 6%, 5-year bonds payable on December 31, 2018. Interest is paid semiannually each June 30 and December 31. The bonds sell at a price of 97; Greece uses the straight-line method of amortizing bond discount or premium. 1) The entry made by Apple Company to record issuance of the bonds payable at December 31, 2018, includes: A- a credit to bonds payable of 970000 B_ a credit to bond interest 30000 C- A debit...
issued 11% bonds, dated January 1, with a face amount of $800,000 on January 1, 2009....
issued 11% bonds, dated January 1, with a face amount of $800,000 on January 1, 2009. The bonds sold for $739,815 and mature in 2028 (20 years). For bonds of similar risk and maturity, the market yield was 12%. Interest is paid semiannually on June 30 and December 31. The company uses the effective interest method of amortization and has a calendar year end.   Instructions: Prepare the journal entries that Federal Semiconductors would make on January 1, June 30, December...
On October 1, 2015, Brimstone Company sold 12% bonds having a maturity value of $800,000 for...
On October 1, 2015, Brimstone Company sold 12% bonds having a maturity value of $800,000 for $853,382 plus accrued interest, which provides the bondholders with a 10% yield. The bonds are dated January 1, 2015, and mature January 1, 2020, with interest payable December 31 of each year. Prepare the journal entries at the date of the bond issuance and for the first interest payment. Show all working in detail
The Argyle Company acquired a $10 million face value bond that has an 8% coupon rate...
The Argyle Company acquired a $10 million face value bond that has an 8% coupon rate (pays interest annually on December 31) on January 1, 2017. The bond matures on December 31, 2019. On January 1, 2017, the market yield (market rate) for bonds of equivalent risk and maturity was 6%. Required: How much did Argyle pay for this bond on January 1, 2017? Prepare the journal entries required on: December 31, 2017 December 31, 2018 December 31, 2019 Assume...
On October 1, 2015, Rune Stone Company sold 12% bonds having a maturity value of $800,000...
On October 1, 2015, Rune Stone Company sold 12% bonds having a maturity value of $800,000 for $853,382 plus accrued interest, which provides the bondholders with a 10% yield. The bonds are dated January 1, 2015, and mature January 1, 2020, with interest payable December 31 of each year. Prepare the journal entries at the date of the bond issuance and for the first interest payment.
On November 1, 2018, Crane Company purchased 1000 of the $1000 face value, 9% bonds of...
On November 1, 2018, Crane Company purchased 1000 of the $1000 face value, 9% bonds of Ramsey, Incorporated, for $1080000, which includes accrued interest of $16100. The bonds, which mature on January 1, 2023, pay interest semiannually on March 1 and September 1. Assuming that Crane uses the straight-line method of amortization and that the bonds are appropriately classified as available-for-sale, the net carrying value of the bonds should be shown on Crane's December 31, 2018, balance sheet at $1000000....
Diaz Company issued bonds with a $98,000 face value on January 1, Year 1. The bonds...
Diaz Company issued bonds with a $98,000 face value on January 1, Year 1. The bonds had a 6 percent stated rate of interest and a 10-year term. Interest is paid in cash annually, beginning December 31, Year 1. The bonds were issued at 97. The straight-line method is used for amortization. b. Determine the carrying value (face value less discount or plus premium) of the bond liability as of December 31, Year 1. c. Determine the amount of interest...
On June 30, 2017, Novak Company issued $4,400,000 face value of 13%, 20-year bonds at $4,731,010,...
On June 30, 2017, Novak Company issued $4,400,000 face value of 13%, 20-year bonds at $4,731,010, a yield of 12%. Novak uses the effective-interest method to amortize bond premium or discount. The bonds pay semiannual interest on June 30 and December 31. Prepare the journal entries to record the following transactions: 1.) The issuance of bonds on June 30, 2017. 2.) The payment of interest and the amortization of the premium on December 31, 2017. 3.) The payment of interest...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT