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Discuss journal entries for the flagstaff bonds

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Reference no: EM131764707

The following information relates to the HTM debt securities investments of Kiran Company during 2016.

a. January 1: The company purchased 8% bonds of Tempe Co. having a par value of $240,000 at 99 plus accrued interest. Interest is payable May 1 and November 1. Maturity date is 11/1/17.

b. May 1: Semiannual interest is received and amortization is updated.

c. July 1: 10% bonds of Flagstaff were purchased. The bonds had a par value of $75,000 and were purchased at 101 plus accrued interest. Interest dates are March 1 and September 1. Maturity date is 9/1/17.

d. September 1: Semiannual interest is received and amortization updated for the Flagstaff bonds.

e. November 1: Semiannual interest is received and amortization updated for the Tempe bonds.

f. December 31: Interest is accrued and amortization updated for both set of bonds.

Required:

Prepare journal entries for all dates. Present journal entries for the Tempe bonds (a, b, e, f), then journal entries for the Flagstaff bonds (c, d, f). No explanations or supporting computations are required. Use straight-line amortization. When computing amortization, round the monthly amortization amounts to the nearest cent. However, journal entry amounts can be rounded to the nearest dollar.

Reference no: EM131764707

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