FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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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!
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