Prepare the journal entries for Lindor Company

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Problem - Lindor Company purchased Ramirez Company's 8-year, $500,000 bond with a 7% coupon rate and 8% yield at issuance on January 1, 2020 for $470,869 plus accrued interest. Interest is paid semiannually on January 1 and July 1. Lindor Company's fiscal year-end is December 31. The fair value of the debt investments on December 31, 2020 is $580,000.

Required -

a. Prepare the journal entries for Lindor Company for 2020, including the purchase of the bonds on January 1, receipt of interest on July 1, and the adjusting entry(ies) on December 31 assuming the debt investments are classified as held-to-maturity.

b. Prepare the additional year-end adjusting entry (if any) assuming the debt investments are classified as available-for-sale.

c. Prepare the additional year-end adjusting entry (if any) assuming the debt investments are classified as trading securities.

Reference no: EM132750842

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