Question
On January 1,2017, Carla Company purchased 12% bonds, having a maturity value of $278,000 for $299,076.51....
On
January 1,2017, Carla Company purchased 12% bonds, having a
maturity value of $278,000 for $299,076.51. The bonds provide the
bond holders with a 10% yield. They are dated January 1,2017 and
mature January 1,3022, with interest received on January 1 of each
year. Carla Company uses the effective interest method to allocate
unamortized discount or premium. The bonds are classified as
available for sale category. The fair value of the bonds at
December 31 of each year end is as follows.
2017 $296,600
2018 $287,300
2019:$286,200
2020:$288,200
2021:$278,000
(A) prepare the journal entry at the date of the bond
purchase
(B) prepare the journal entries to record the interest revenue
and recognition of fair value for 2017.
(C)prepare the entry to record the recognition of fair value
for 2018
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Answer #1
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