please help me View PoliciesShow Attempt HistoryCurrent Attempt in ProgressOn January 1, 2020, Pharoah Company purchased $320,000, 6% bonds of Aguirre Co. for $294,044. The bonds were purchased toyield 8% interest. Interest is payable semiannually on July 1 and January 1. The bonds mature on January 1, 2025. Pharoah Companyuses the effective-interest method to amortize discount or premium. On January 1, 2022, Pharoah Company sold the bonds for$295,711 after receiving interest to meet its liquidity needs.(a) (c), (and (e)(c)(d)(e)Prepare the journal entries to record the semiannual interest on (1) July 1, 2020, and (2) December 31, 2020.If the fair value of Aguirre bonds is $297,711 on December 31, 2021, prepare the necessary adjusting entry. (Assumethe fair value adjustment balance on December 31, 2020, is a debit of $3,098.)Prepare the journal entry to record the sale of the bonds on January 1, 2022.(Round answers to O decimal places, e.g. 2,500. Credit account titles are automatically indented when amount is entered. Do not indentmanually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.)No.(c) (1)DateAccount Titles and ExplanationDebitC

Working note: Computation of carrying value of the bond investment as on December 31, 2021:

On January 1, 2020, Pharoah Company purchased $320,000, 6% bonds of Aguirre Co. for $294,044. The bonds were purchased to yield 8% interest. Interest is payable semiannually on July 1 and January 1. The bonds mature on January 1, 2025. Pharoah Company uses the effective-interest method to amortize discount or premium. On January 1, 2022, Pharoah Company sold the bonds for $295,711 after receiving interest to meet its liquidity needs.

On January 1, 2020, Pharoah Company purchased $320,000, 6% bonds of Aguirre Co. for $294,044. The bonds were purchased to yield 8% interest. Interest is payable semiannually on July 1 and January 1. The bonds mature on January 1, 2025. Pharoah Company uses the effective-interest method to amortize discount or premium. On January 1, 2022, Pharoah Company sold the bonds for $295,711 after receiving interest to meet its liquidity needs.

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

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 1MC

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