Required: 1. Prepare the entry for the preceding transaction 2. Based on the result of your audit, determine the following: A. Book value of bond sinking fund on December 31, 2020 B. Book value of bond sinking fund on December 31, 2021 C. Cash remitted to Clarettes from Trustee on January 1, 2022
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On January 1, 2020, Clarettes Inc. established a sinking fund of P2,000,000 under a trustee BDO Bank for payment of Bonds Payable which will mature on January 1, 2022. On December 31, 2020, the periodic trustee report shows that P1,000,000 was invested in securities and P500,000 in
Required:
1. Prepare the entry for the preceding transaction
2. Based on the result of your audit, determine the following:
A. Book
B. Book value of bond sinking fund on December 31, 2021
C. Cash remitted to Clarettes from Trustee on January 1, 2022
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Solved in 2 steps
- Investments On October 4, 2019, Collins Company purchased 100 bonds of Steph Company for 6,400 as a short-term investment in securities classified as available for sale. On December 31, 2019, the bonds had a fair value of 6,300, and on February 8, 2020, Collins sold the bonds for 6,700. Required: In journal entry form, prepare the spreadsheet entries to record these transactions for Collins Companys 2019 and 2020 statement of cash flows.Refer to the information in RE13-5. Assume that on December 31, 2019, the investment in Smith Corporation bonds has a market value of 12,500. Prepare the year-end journal entry to record the unrealized gain or loss.The following information relates to non-current investments placed in trust by XX Company. This investment is in compliance with the requirements of an issue of P4,000,000 bonds by XX. Bond sinking fund, Jan. 1, 2019 P2,250,000 Additional investments to the fund during 2019 450,000 Dividend revenue on equity securities investments 75,000 Interest revenue on debt securities investments 150,000 Administration costs 25,000 What amount should XX Company in its December 31, 2019 statement of financial position related to its non-current investments for bond sinking fund?
- Vilna Ltd., during the year ended December 31, 2021, had the following transactions related to money-market instruments recorded at amortized cost: 2 Purchased a 120-day $100,000 treasury bill maturing on April 1 for $95,700. 1 The treasury bill matured. 1 Invested $75,000 in a money-market fund. 31 Received notification that $188 of interest had been earned and added to the fund. 30 Received notification that $188 of interest had been earned and added to the fund. 15 Cashed the money-market fund and received $75,470. 1 Purchased a 90 day, 2%, $40,000 treasury bill for $39,221. Jan. Apr. Aug. Sept. Oct. Nov. Instructions: a. Prepare the journal entries to record the above transactions. b. Prepare any required adjusting journal entries at December 31. Round amounts to the nearest dollar. Show ALL calculations for full marks.Ayayai Corporation, during the year ended October 31, 2024, had the following transactions for money - market instruments purchased to earn interest: Jan. 2 Purchased a 90-day, $34,800 treasury bill maturing on May 1 for $ 34,591. May 1 The treasury bill matured. Aug. 1 Invested $56, 600 in a money - market fund. Aug. 31 Received notification that $142 of interest had been earned and added to the fund. Sept. 30 Received notification that $142 of interest had been earned and added to the fund. Oct. 1 Purchased a 60-day, 2.00%, $26, 100 treasury bill for $25,970. Oct. 15 Cashechthe money - market fund and received $56,955. (a) Prepare the journal entries to record the above transactions. (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. List all debit entries before credit entries.)…The following information relates to non-current investments that Dragon Company placed in trust as required by underwriter of its bonds: Bond sinking fund balance, January 1, 2018, P2,000,000; Additional investment during 2018, P500,000; Interest revenue, P20,000; Administrative costs, P15,000,Carrying value of bonds payable, P3,000,000. What amount should Dragon Company report in its December 31, 2018 balance sheet related to its non-current investment for bond sinking fund requirements?
- On January 1, 2018, an entity purchased bonds with face amount of P5,000,000. The entity paid P4,500,000 plus transaction cost of P168,600. The bonds mature on December 31, 2020 and pay 6% interest annually on December 31 of each year with 8% effective yield. The bonds were quoted at 105 on December 31, 2018 and 110 on December 31, 2019.The business model in managing the financial asset is to collect contractual cash flows that are solely payments of principal and interest and also to sell the bonds in the open market. The entity has not elected the fair value option. On December 31, 2019, the entity changed its business model to collect only contractual cash flows. On December 31, 2020, the bonds are quoted at 115 and the market interest rate is 10%. find the following: 1. What amount of unrealized gain should be reported as component of OCI in the statement of comprehensive income for 2018? 2. What amount of unrealized gain should be reported as component of OCI in the statement of…On January 1, 2021, Illuminati Company purchased 10% bonds with a face amount of P3,000,000. The bonds mature on January 1, 2031, and were purchased for P3,405,000 to yield 8%. The entity used the effective interest method of amortization and interest is payable annually every December 31. The business model for this investment is to collect contractual cash flows composed of interest and principal. On December 31, 2022, the entity changed the business model for this investment to realize fair value changes. On January 1, 2023, the fair value of the bonds was P2,845,000 at an effective rate of 11%. How much is the gain or loss on reclassification? 502,592 gain O 502,592 loss 532,400 gain O 532,400 lossOn January 1, 2020, a company issued P10,000,000 bonds that will mature in 5 years. The management decided to set up a separate fund for the retirement of these bonds. The fund is to be placed in a separate account to be maintained in the company's depository bank.In a board resolution, it was decided that deposits of equal amounts will be made every June 30 and December 31, starting June 30, 2020 up to December 31, 2024. The company expects to earn an average interest of 10%, net of tax, on this investment. How much is the required semi-annual deposit that will accumulate P10,000,000 at the end of five years? A. P1,637,975 B. P1,295,052 C. P1,000,000 D. P 795,045
- The following information is available concerning Nunan Corporation’s sinking fund: 2019 Jan. 1 Established a sinking fund to retire an outstanding bond issue by contributing $425,000. Feb. 3 Purchased securities for $400,000. July 30 Sold securities originally costing $48,000 for $45,000. Dec. 31 Collected dividends and interest on the remaining securities in the amount of $49,000; the securities had a market value of $355,000 at this time. 2020 Dec. 31 Collected dividends and interest on the remaining securities in the amount of $40,000. 31 Paid sinking fund expenses of $4,500. 31 Sold the remaining securities in the fund for $360,000. 31 Retired an outstanding bond issue of $500,000 with the cash from the fund and transferred the remaining fund balance back to the Cash account. Required: Prepare journal entries to record the preceding transactions for Nunan.On January 1, 2020, Soledad Company purchased 10% bonds with face amount of P3,000,000. The bonds mature on January 1, 2030 and were purchased for P3,405,000 to yield 8%. The entity used the effective interest method of amortization and interest is payable annually every December 31. The business model for this investment is to collect contractual cash flows composed of interest and principal. On December 31, 2021, the entity changed the business model for this investment to realize fair value changes. On January 1, 2022, the fair value of the bonds was P2,845,000 at an effective rate of 11%. Required: . 2. Compute the loss on reclassification.On January 1, 2020, Aguilar Corporation purchased bonds with a face value of P4,000,000 forP3,649,600 in order to collect contractual cash flows that are solely payments of principal and interest.The bonds are purchased to yield 10% interest. The nominal interest rate on the bonds is 8% payableannually every December 31.On December 31, 2021, as a result of a change in the business model for managing financial assets,the entity decided to reclassify the bonds from amortized cost to fair value. On that date, the carryingamount of the bond investment is P3,744,016 after discount amortization using the effective interestmethod. The market value of the bonds on January 1, 2015, is 10%. Requirements: 1. Preparethe necessary journal entries to record the transactions using the change is from fair value to amortized cost.