E17.3B (LO 1) (Entries for Held-to-Maturity Securities) On January 1, 2020, Hummer Company purchased 5% bonds, hav-ing a maturity value of $600,000, for $514,725. The bonds provide the bondholders with a 7% yield. They are dated January 1, 2020, and mature January 1, 2030, with interest receivable June 30 and December 31 of each year. Hummer Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category. Instructions (a) Prepare the journal entry at the date of the bond purchase. (b) Prepare the first 3 years of a bond amortization schedule. (c) Prepare the journal entries to record the interest received and the amortization for 2020. E17.4B (LO 1) (Entries for Available-for-Sale Securities) Assume the same information as in E17.3B except that the securi- ties are classified as available-for-sale. The fair value of the bonds at December 31 of each year-end is as follows: 2020 2021 2022 $516,000 $10,000 504,000 2023 2024 $540,000 564,000 Instructions (a) Prepare the journal entry at the date of the bond purchase. (b) Prepare the journal entries to record the interest received and recognition of fair value for 2020. (c) Prepare the journal entry to record the recognition of fair value for 2021.
E17.3B (LO 1) (Entries for Held-to-Maturity Securities) On January 1, 2020, Hummer Company purchased 5% bonds, hav-ing a maturity value of $600,000, for $514,725. The bonds provide the bondholders with a 7% yield. They are dated January 1, 2020, and mature January 1, 2030, with interest receivable June 30 and December 31 of each year. Hummer Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category. Instructions (a) Prepare the journal entry at the date of the bond purchase. (b) Prepare the first 3 years of a bond amortization schedule. (c) Prepare the journal entries to record the interest received and the amortization for 2020. E17.4B (LO 1) (Entries for Available-for-Sale Securities) Assume the same information as in E17.3B except that the securi- ties are classified as available-for-sale. The fair value of the bonds at December 31 of each year-end is as follows: 2020 2021 2022 $516,000 $10,000 504,000 2023 2024 $540,000 564,000 Instructions (a) Prepare the journal entry at the date of the bond purchase. (b) Prepare the journal entries to record the interest received and recognition of fair value for 2020. (c) Prepare the journal entry to record the recognition of fair value for 2021.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable
Section: Chapter Questions
Problem 7P: Wilbury Corporation issued 1 million of 13.5% bonds for 985,071.68. The bonds are dated and issued...
Related questions
Question
Help me solve 4B please and thanks in advance! please show the works note for each answer cause I would like to understand everything.
Transcribed Image Text:E17.3B (LO 1) (Entries for Held-to-Maturity Securities) On January 1, 2020, Hummer Company purchased 5% bonds,
hav-ing a maturity value of $600,000, for $514,725. The bonds provide the bondholders with a 7% yield. They are dated
January 1, 2020, and mature January 1, 2030, with interest receivable June 30 and December 31 of each year. Hummer
Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in
the held-to-maturity category.
Instructions
(a) Prepare the journal entry at the date of the bond purchase.
(b) Prepare the first 3 years of a bond amortization schedule.
(c) Prepare the journal entries to record the interest received and the amortization for 2020.
E17.4B (LO 1) (Entries for Available-for-Sale Securities) Assume the same information as in E17.3B except that the securi-
ties are classified as available-for-sale. The fair value of the bonds at December 31 of each year-end is as follows:
2020
2021
2022
$516,000
510,000
504,000
2023
2024
$540,000
564,000
Instructions
(a) Prepare the journal entry at the date of the bond purchase.
(b) Prepare the journal entries to record the interest received and recognition of fair value for 2020.
(c) Prepare the journal entry to record the recognition of fair value for 2021.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps
Recommended textbooks for you
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT