Rumpi Company purchased $50,000 of 7 percent bonds of Evermistress Corporation on January 1, 2015, for $48,689. The bonds mature in 3 years and the yield is 8 percent. The interest is payable on January 1 and July 1. Instructions 1. Complete the amortisation schedule below Bond Discount/ Premium Amortization Date Cash Received Interest Revenue Carrying Amount of Bonds 2. Prepare the journal entry on 1 January 2015, 1 July 2015, 31 December 2015, 1 January 2016 3. Assuming this bond is categorized under FVOCI, assume that the fair value on Dec 31. 2015 was $50.060. prepare the fair value adjustment entry 4. II Rumpi Company sells its investment in Evermistress on August 1, 2016, at 110 plus accrued interest. compute the realised gain/loss on the sale and record the sale of the bonds!

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question
Rumpi Company purchased $50,000 of 7 percent bonds of Evermistress Corporation on January 1, 2015, for $48,689. The bonds
mature in 3 years and the yield is 8 percent. The interest is payable on January 1 and July 1.
Instructions
1. Complete the amortisation schedule below
Bond Discount/ Premium
Amortization
Date
Cash Received
Interest Revenue
Carrying Amount of Bonds
2. Prepare the journal entry on 1 January 2015, 1 July 2015, 31 December 2015, 1 January 2016
3. Assuming this bond is categorized under FVOCI, assume that the fair value on Dec 31. 2015 was $50.060. prepare the fair value
adjustment entry
4. II Rumpi Company sells its investment in Evermistress on August 1, 2016, at 110 plus accrued interest. compute the realised
gain/loss on the sale and record the sale of the bonds!
Transcribed Image Text:Rumpi Company purchased $50,000 of 7 percent bonds of Evermistress Corporation on January 1, 2015, for $48,689. The bonds mature in 3 years and the yield is 8 percent. The interest is payable on January 1 and July 1. Instructions 1. Complete the amortisation schedule below Bond Discount/ Premium Amortization Date Cash Received Interest Revenue Carrying Amount of Bonds 2. Prepare the journal entry on 1 January 2015, 1 July 2015, 31 December 2015, 1 January 2016 3. Assuming this bond is categorized under FVOCI, assume that the fair value on Dec 31. 2015 was $50.060. prepare the fair value adjustment entry 4. II Rumpi Company sells its investment in Evermistress on August 1, 2016, at 110 plus accrued interest. compute the realised gain/loss on the sale and record the sale of the bonds!
Expert Solution
steps

Step by step

Solved in 4 steps with 4 images

Blurred answer
Knowledge Booster
Investments and Financial instruments
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education