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Calculate the price david corp would have paid

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Question - On January 1, 2021, David Corp purchased Philips INC with a face value of US$270,000. Bonds. The stipulated interest rate on TARRA INC bonds is 10%. Interest is paid semiannually on June 30 and December 31, and the bonds mature in 10 years. For bonds with similar risks and maturities, the yield on a specific date is as follows.

January 1, 2021, 11.0%

June 30, 2021, 12.0%

December 31, 2021, 14.0%

Answer the questions below by entering your answer in the appropriate table

Required -

1) Calculate the Price David Corp would have paid for the Philips INC Bonds on January 1, 2021(ignore brokerage fees) and make a journal entry to record the purchase

2) Record all appropriate journal entries related to the bond investment during 2021, assuming David Corp accounts for the bonds as a held-to-maturity investment. David Corp calculates interest revenue at the effective interest rate as of the date it purchased the bonds.

3) Work on all appropriate journal entries related to the bonds' investment during 2021, assuming that David Corp choices the fair value option when the bonds were purchased and that David Corp determining the fair value of the bonds semiannually, David Inc calculates interest revenue at the effective interest rate as of the date it purchased the bonds.

Reference no: EM132773420

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