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What should be the balance of the fvoci bond investment

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Reference no: EM132920289

On January 1, 2021, Hoist Up Company(HUC) purchased bonds of Southern Inc. that had the following characteristics: 12% coupon rate, $300,000 face value, maturing on December 31, 2025, and interest paid annually on December 31. The bonds were purchased by HUC for$311,087.69.The fair value of the bonds at December 31, 2021was $320,500. The fair value of the bonds at December 31, 2022was $309,800. The bonds are not considered to be impaired.

REQUIRED

Problem 1: Prepare journal entries for the following dates:

(a) January 1, 2021;

(b) December 31, 2021; and

(c) December 31, 2022.

Problem 2: As of December 31, 2022, what should be the balance of the FVOCI Bond Investment account and the balance of the Accumulated Other Comprehensive Income (AOCI) account?

Problem 3: Assume that on January 1, 2023, HUC sells the bonds for $309,700. Prepare the applicable journal entry for the sale.

Reference no: EM132920289

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