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
  • SEE MORE 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