Reference no: EM132315757

Question

The following information relates to the debt investments of Sarasota Inc. during a recent year:

1. On February 1, the company purchased Gibbons Corp. 10% bonds with a face value of $324,000 at 100 plus accrued interest. Interest is payable on April 1 and October 1.

2. On April 1, semi-annual interest was received on the Gibbons bonds.

3. On June 15, Sampson Inc. 9% bonds were purchased. The $216,000 par-value bonds were purchased at 100 plus accrued interest. Interest dates are June 1 and December 1.

4. On August 31, Gibbons Corp. bonds with a par value of $65,000 purchased on February 1 were sold at 99 plus accrued interest.

5. On October 1, semi-annual interest was received on the remaining Gibbons Corp. bonds.

6. On December 1, semi-annual interest was received on the Sampson Inc. bonds.

7. On December 31, the fair values of the bonds purchased on February 1 and June 15 were 98.5 and 101, respectively. Assume the investments are accounted for under the recognition and measurement requirements of IFRS 9 Financial Instruments. Assume the investments are NOT adjusted for Present Value.

Required:

Assume instead that Sarasota manages these investments based on their yield to maturity (Amortized Cost) journal entries that you consider necessary, including December 31 adjusting entries.