Robert Company purchased $100,000 of 8 percent bonds of Evergreen Corp. on January 1, 20x1, at $92,278. The bonds mature January

Question

9 months ago

5

Robert Company purchased $100,000 of 8 percent bonds of Evergreen Corp. on January 1, 20x1, at $92,278. The bonds mature January

1, 20x16, and yield 10%. Interest is payable each July 1 and January 1. The market value on December 31, 20x1 was $92,500 and all bonds were sold for $93,300 on January 1, 20x2.Required: prepare journal entries on January 1, 20x1, July 1, 20x1, December 31, 20x1 and January 1, 20x2 assuming the bond investment is classified as(1) Held-to-Maturity(2) Trading(3) Available-for-SaleII. On November 1, 20x1, Bush Company issued 10% bonds with a face amount of $20 million. The bonds mature in 10 years. For bonds of similar risk and maturity, the market yield is 12%. Interest is paid semiannually on April 30 and October 31. Bush is a calendar-year corporation.Required:(1.) Determine the price of the bonds at November 1, 20x1.(2.) Prepare the journal entry to record the bond issuance by Bush on November 1, 20x1.(3.) Prepare the journal entries (using the effective interest method):a. December 31, 20x1b. April 30, 20x2c. October 31, 20x2*Assume no reversing entry is recorded on January 1, 20x2.(4.) What would be the journal entry if all bonds are retired at 103 on May 1, 20x3 right after the third payment.

Business

1 answer:

Annette [7] · Answer 1 · 2024-04-23T19:56:23+03:00

On January 1st, 20x1, Robert Company paid $92,278 for $100,000 of Evergreen Corp.'s 8% bonds that were available for sale. 12% is the market yield. Interest is paid on April 30 and October 31 of each year. Bush is a company with a calendar year. The right response is $4,556,500.

On December 31x1, Fox should declare $4,556,500.

Bonds are currently valued $4,580,000.

$50,000 Bonds are currently valued $4,530,000.

From July 1 to December 31, the discount is amortised over a six-month period: Bonds are currently valued $4,580,000.

$50,000 Bonds are currently valued $4,530,000.

From July 1 to December 31, the discount is amortised over a six-month period: Interest Income = $226.00 ($4,530,00% x 10% x 6/12)

In terms of interest-bearing quantities, $5,000,000 times 8% times six months is $200,000.

Interest revenue less interest due is equal to discounted interest.

Discount amortised is calculated as $226500 less $200000, or $2650.

As a result, $4,530,000 + $26,500 is the total that Fox must declare as of December 31, 2020, multiplied by one.

Thus, On December 31x1, Fox should declare $4,556,500.

Visit for more information on payment

brainly.com/question/14293241

#SPJ4