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Blossom Company purchased 70 Rinehart Company 5%, 10-year, $1,000 bonds on January 1, 2022, for $70,000. The bonds pay interest annually on January 1. On January 1, 2023, after receipt of interest, Blossom Company sold 40 of the bonds for $37,800.

Blossom Company purchased 70 Rinehart Company 5%, 10-year, $1,000 bonds on January 1, 2022, for $70,000. The bonds pay interest annually on January 1. On January 1, 2023, after receipt of interest, Blossom Company sold 40 of the bonds for $37,800.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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**Investment Scenario Analysis: Blossom Company's Bond Transactions** **Overview:** Blossom Company engaged in a financial transaction involving corporate bonds. On January 1, 2022, the company purchased 70 bonds from Rinehart Company. These bonds were characterized by the following features: - **Interest Rate:** 5% - **Maturity Duration:** 10 years - **Face Value:** $1,000 per bond - **Total Purchase Price:** $70,000 **Interest Details:** The bonds provide annual interest payments, distributed every January 1st. **Subsequent Transaction:** On January 1, 2023, after receiving the annual interest payment, Blossom Company decided to sell a portion of its bond holdings. The company sold 40 out of the 70 bonds for a total of $37,800. This scenario provides a practical example of bond investment, illustrating aspects such as initial purchase, interest payment, and the subsequent sale of securities.
Transcribed Image Text:**Investment Scenario Analysis: Blossom Company's Bond Transactions** **Overview:** Blossom Company engaged in a financial transaction involving corporate bonds. On January 1, 2022, the company purchased 70 bonds from Rinehart Company. These bonds were characterized by the following features: - **Interest Rate:** 5% - **Maturity Duration:** 10 years - **Face Value:** $1,000 per bond - **Total Purchase Price:** $70,000 **Interest Details:** The bonds provide annual interest payments, distributed every January 1st. **Subsequent Transaction:** On January 1, 2023, after receiving the annual interest payment, Blossom Company decided to sell a portion of its bond holdings. The company sold 40 out of the 70 bonds for a total of $37,800. This scenario provides a practical example of bond investment, illustrating aspects such as initial purchase, interest payment, and the subsequent sale of securities.
**Journal Entry Form for Transaction Recording** This template is used to prepare journal entries for recording financial transactions. Here is a detailed breakdown of the form fields: --- **Instructions:** - List all debit entries before credit entries. - Credit account titles are automatically indented when the amount is entered. Do not indent manually. - If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. - Record journal entries in the order presented in the problem. --- ### Form Fields: **1. Date:** - A dropdown menu to select the date of the transaction. **2. Account Titles and Explanation:** - A text field to enter the name of the account and a brief explanation of the transaction. **3. Debit:** - A field to enter the debit amount for the transaction. **4. Credit:** - A field to enter the credit amount for the transaction. --- ### Additional Guidance: - **To record receipt of interest:** - Utilize this line to indicate entries related to interest income. - **To record sale of bonds:** - Use this section for journal entries pertaining to bond sales. --- This structured approach ensures clarity and accuracy in maintaining financial records, crucial for accounting purposes.
Transcribed Image Text:**Journal Entry Form for Transaction Recording** This template is used to prepare journal entries for recording financial transactions. Here is a detailed breakdown of the form fields: --- **Instructions:** - List all debit entries before credit entries. - Credit account titles are automatically indented when the amount is entered. Do not indent manually. - If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. - Record journal entries in the order presented in the problem. --- ### Form Fields: **1. Date:** - A dropdown menu to select the date of the transaction. **2. Account Titles and Explanation:** - A text field to enter the name of the account and a brief explanation of the transaction. **3. Debit:** - A field to enter the debit amount for the transaction. **4. Credit:** - A field to enter the credit amount for the transaction. --- ### Additional Guidance: - **To record receipt of interest:** - Utilize this line to indicate entries related to interest income. - **To record sale of bonds:** - Use this section for journal entries pertaining to bond sales. --- This structured approach ensures clarity and accuracy in maintaining financial records, crucial for accounting purposes.
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