P16.1 (LO 1) (Debt Securities) Presented below is an amortization schedule related to Spangler Company's 5-year, $100,000 bond with a 7% interest rate and a 5% yield, purchased on December 31, 2023, for $108,660. Date Cash Received 12/31/23 12/31/24 $7,000 12/31/25 7,000 12/31/26 7,000 12/31/27 12/31/28 7,000 7,000 Interest Revenue $5,433 5,354 5,272 5,186 5,095 Bond Premium Amortization The following schedule presents a comparison of the amortized cost and fair value of the bonds at year-end. Instructions Amortized cost Fair value 12/31/24 $107,093 106,500 12/31/25 $105,447 107,500 $1,567 1,646 1,728 1,814 1,905 Carrying Amount of Bonds $108,660 107,093 105,447 103,719 101,905 100,000 12/31/26 $103,719 105,650 12/31/27 $101,905 103,000 a. Prepare the journal entry to record the purchase of these bonds on December 31, 2023, assuming the bonds are classified as held-to-maturity securities. b. Prepare the journal entry (entries) related to the held-to-maturity bonds for 2024. c. Prepare the journal entry (entries) related to the held-to-maturity bonds for 2026. d. Prepare the journal entry (entries) to record the purchase of these bonds, assuming they are classified as available-for-sale. e. Prepare the journal entry (entries) related to the available-for-sale bonds for 2024. f. Prepare the journal entry (entries) related to the available-for-sale bonds for 2026. 12/31/28 $100,000 100,000
P16.1 (LO 1) (Debt Securities) Presented below is an amortization schedule related to Spangler Company's 5-year, $100,000 bond with a 7% interest rate and a 5% yield, purchased on December 31, 2023, for $108,660. Date Cash Received 12/31/23 12/31/24 $7,000 12/31/25 7,000 12/31/26 7,000 12/31/27 12/31/28 7,000 7,000 Interest Revenue $5,433 5,354 5,272 5,186 5,095 Bond Premium Amortization The following schedule presents a comparison of the amortized cost and fair value of the bonds at year-end. Instructions Amortized cost Fair value 12/31/24 $107,093 106,500 12/31/25 $105,447 107,500 $1,567 1,646 1,728 1,814 1,905 Carrying Amount of Bonds $108,660 107,093 105,447 103,719 101,905 100,000 12/31/26 $103,719 105,650 12/31/27 $101,905 103,000 a. Prepare the journal entry to record the purchase of these bonds on December 31, 2023, assuming the bonds are classified as held-to-maturity securities. b. Prepare the journal entry (entries) related to the held-to-maturity bonds for 2024. c. Prepare the journal entry (entries) related to the held-to-maturity bonds for 2026. d. Prepare the journal entry (entries) to record the purchase of these bonds, assuming they are classified as available-for-sale. e. Prepare the journal entry (entries) related to the available-for-sale bonds for 2024. f. Prepare the journal entry (entries) related to the available-for-sale bonds for 2026. 12/31/28 $100,000 100,000
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 5P: Bats Corporation issued 800,000 of 12% face value bonds for 851,705.70. The bonds were dated and...
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Transcribed Image Text:P16.1 (LO 1) (Debt Securities) Presented below is an amortization schedule related to Spangler Company's 5-year, $100,000 bond with a 7% interest rate and a 5% yield, purchased on December 31, 2023, for
$108,660.
Date
Cash Received
12/31/23
12/31/24
$7,000
12/31/25
7,000
12/31/26
7,000
12/31/27
12/31/28
7,000
7,000
Interest Revenue
$5,433
5,354
5,272
5,186
5,095
Bond Premium Amortization
The following schedule presents a comparison of the amortized cost and fair value of the bonds at year-end.
Instructions
Amortized cost
Fair value
12/31/24
$107,093
106,500
12/31/25
$105,447
107,500
$1,567
1,646
1,728
1,814
1,905
Carrying Amount of Bonds
$108,660
107,093
105,447
103,719
101,905
100,000
12/31/26
$103,719
105,650
12/31/27
$101,905
103,000
a. Prepare the journal entry to record the purchase of these bonds on December 31, 2023, assuming the bonds are classified as held-to-maturity securities.
b. Prepare the journal entry (entries) related to the held-to-maturity bonds for 2024.
c. Prepare the journal entry (entries) related to the held-to-maturity bonds for 2026.
d. Prepare the journal entry (entries) to record the purchase of these bonds, assuming they are classified as available-for-sale.
e. Prepare the journal entry (entries) related to the available-for-sale bonds for 2024.
f. Prepare the journal entry (entries) related to the available-for-sale bonds for 2026.
12/31/28
$100,000
100,000
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