Prepare the journal entries to record the interest received

Assignment Help Financial Accounting

Reference no: EM131214305

On January 1, 2013, Hi and Lois Company purchased 13% bonds, having a maturity value of $547,500, for $609,763.18. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2013, and mature January 1, 2018, with interest receivable December 31 of each year. Hi and Lois Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified as available-for-sale category. The fair value of the bonds at December 31 of each year-end is as follows. 2013 $606,173 2016 $518,200 2014 $515,700 2017 $547,500 2015 $512,700

(a) Prepare the journal entry at the date of the bond purchase.

(b) Prepare the journal entries to record the interest received and recognition of fair value for 2013.

Reference no: EM131214305

Questions Cloud

The implicit interest rate computed by the lessor : If the lessee knows the implicit interest rate computed by the lessor (e.g., 7%) and it is less than the lessee’s incremental borrowing rate (e.g., 8%), then the lessee must use the lessor’s rate. Why does the FASB require companies to use the lower ..

What is the total depreciation amount prior : They placed the rental home into service on March 1, 2009, and of the $515,000 purchase price, $426,000 was allocated to the land. What would the depreciation amount be when filing a tax return for 2015. Also, what is the total depreciation amount pr..

What is the method of presentation required : What is the method of presentation required by SFAS 160 of “non-controlling interest” on a consolidated balance sheet?

Prepare a bond amortization schedule : On January 1, 2013, Hi and Lois Company purchased 12% bonds having a maturity value of $343,000, for $369,004.48. The bonds provide the bondholders with a 10.00% yield. The bonds are classified in the held-to-maturity category. Prepare the journal en..

Prepare the journal entries to record the interest received : On January 1, 2013, Hi and Lois Company purchased 13% bonds, having a maturity value of $547,500, for $609,763.18. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2013, and mature January 1, 2018, with interest receivabl..

Calculate the amount of intercompany sales : Perkins Company owns 85% of Sheraton Company. Perkins Company sells merchandise to Sheraton Company at 20% above cost (gross profit). During 2011 and 2012, such sales amounted to $400,000 and $500,000, respectively. At the end of each year, Sheraton ..

Difference between the implied value and the book value : The difference between the implied value and the book value of the company is calculated to be $200,000. Per review of the financial information provided by the company, the difference relates to tangibles and intangibles. Tangibles – Inventory and P..

When the implied book value exceeds the book values : When the implied book value exceeds the book values of identifiable net assets, the difference is accounted for as

Entry to eliminate the inter company sale of land : P Company owns 80% of the outstanding stock of S Company. On January 1, 2011, S Company sold land to P Company for $400,000. S had originally purchased the land on June 30, 2007, for $150,000. Prepare the w/p entry to eliminate the intercompany sale ..

User Account

All Pages