User Account

All Pages

Prepare the journal entry to record the purchase of bonds

Assignment Help Accounting Basics
Reference no: EM132450577

Problem - Available-for-Sale Debt Securities

On January 1, 2014, Novotna Company purchased $400,000, 8% bonds of Aguirre Co. for $369,114. The bonds were purchased to yield 10% interest. Interest is payable semiannually on July 1 and January 1. The bonds mature on January 1, 2019. Novotna Company uses the effective-interest method to amortize discount or premium. On January 1, 2016, Novotna Company sold the bonds for $370,726 after receiving interest to meet its liquidity needs.

Required -

1. Prepare the journal entry to record the purchase of bonds on January 1. Assume that the bonds are classified as available-for-sale.

2. Prepare the amortization schedule for the bonds.

3. Prepare the journal entries to record the semiannual interest on July 1, 2014, and December 31, 2014.

4. If the fair value of Aguirre bonds is $372,726 on December 31, 2015, prepare the necessary adjusting entry. (Assume the fair value adjustment balance on January 1, 2015, is a debit of $3,375.)

5. Prepare the journal entry to record the sale of the bonds on January 1, 2016.

Reference no: EM132450577

Questions Cloud

Discuss pros and cons of using digital approvals : Please provide the pros and cons of using digital approvals and signatures. Please also identify and discuss a scenario in which the use of digital approvals
Discuss collections of medium-to-large merchandising company : Suggest at least two (2) ways that management could manipulate earnings, and make specific recommendations for the internal control procedure to prevent
How standard tools of expansionary monetary policy : Explain how you could use the standard tools of expansionary monetary policy and expansionary fiscal policy to stimulate this economy towards economic growth
What are the expected lost sales : What is the expected left over inventory?What are the expected lost sales?What is its stock-out probability?What is its expected profit?
Prepare the journal entry to record the purchase of bonds : Prepare the journal entry to record the purchase of bonds on January 1. Assume that the bonds are classified as available-for-sale
Describe investments in global markets : Imagine that you are the CFO of a U.S.-based international manufacturing company. Propose two (2) actions that you would take in order to defend the difference
By what date must IRS assert a notice of deficiency : A corporation filed its 2014 calendar year tax return showing $120,000 gross income. By what date must IRS assert a notice of deficiency
Discuss the advantages of positive and negative confirmation : Discuss the advantages of positive and negative confirmations, and ascertain whether or not email and oral confirmations are acceptable to increase customer
What is recruiting and selection in the hr process : What is planning and control when it comes to supply chain management?How does organizational structure affect organizational strategy?

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Theory of interest - term structure of interest rates

Term Structure of Interest Rates

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd