On december 31, 2015, Leslie Company held an investment in bonds of Kaufmann Company which it categorized as being held to maturity. At that time, the 8%, $100,000 face value bonds had a carrying value of $107,023.56 and were being amortized using the effective interest method based on a market rate of 7%. Interest on these bonds is paid annually each December 31. On December 31, 2016, after recording the interest earned, Leslie decided to reclassify the Kaufmann Bonds to its available-for-sale catrgory in anticipation of a major restructuring. At that time, the ending quoted market price for teh bonds was $105,000. Required Prepare the journal entries on December 31, 2016, to record the interest earned and the reclassification.
On december 31, 2015, Leslie Company held an investment in bonds of Kaufmann Company which it categorized as being held to maturity. At that time, the 8%, $100,000 face value bonds had a carrying value of $107,023.56 and were being amortized using the effective interest method based on a market rate of 7%. Interest on these bonds is paid annually each December 31. On December 31, 2016, after recording the interest earned, Leslie decided to reclassify the Kaufmann Bonds to its available-for-sale catrgory in anticipation of a major restructuring. At that time, the ending quoted market price for teh bonds was $105,000. Required Prepare the journal entries on December 31, 2016, to record the interest earned and the reclassification.
Chapter13: Long-term Liabilities
Section: Chapter Questions
Problem 5PA: Volunteer Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July...
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