what amount should RED initially record its investment in Orange Company? 2. At what amount should RED initially record its investment in Yellow Corporation? 3. How much gain or (loss) should be recognized on the sale of Yellow bon
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1. At what amount should RED initially record its investment in Orange Company?
2. At what amount should RED initially record its investment in Yellow Corporation?
3. How much gain or (loss) should be recognized on the sale of Yellow bonds?
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- Wilbury Corporation issued 1 million of 13.5% bonds for 985,071.68. The bonds are dated and issued October 1, 2019, are due September 30, 2020, and pay interest semiannually on March 31 and September 30. Assume an effective yield rate of 14%. Required: 1. Prepare a bond interest expense and discount amortization schedule using the straight-line method. 2. Prepare a bond interest expense and discount amortization schedule using the effective interest method. 3. Prepare adjusting entries for the end of the fiscal year December 31, 2019, using the: a. straight-line method of amortization b. effective interest method of amortization 4. If income before interest and income taxes of 30% in 2020 is 500,000, compute net income under each alternative. 5. Assume the company retired the bonds on June 30, 2020, at 98 plus accrued interest. Prepare the journal entries to record the bond retirement using the: a. straight line method of amortization b. effective interest method of amortization 6. Compute the companys times interest earned (pretax operating income divided by interest expense) for 2020 under each alternative.Banaba Company had the following transactions in bond investment held as trading for the current year. Mar.1 Purchased 1,000 P1,000, 12% bonds of Lander Company at 90 excluding accrued interest. Interest is payable on February 1 and August 1. Apr. 1 Purchased 3,000, P1,000, 12% bonds of Narita Corporation at 92 plus accrued interest. Interest is payable March 1 and September 1. Oct. 1 Sold 500 of Narita bonds at 102 excluding accrued interest. Dec. 1 Sold all of the Lander bonds at 95 plus accrued interest 31 The market value of the Narita bonds is 90. Required; Prepare journal entries to record the transactions including receipt and accrued interest.1. Debt Investment Transactions, Available-for-Sale Valuation Rekya Mart Inc. is a general merchandise retail company that began operations on January 1, Year 1. The following transactions relate to debt investments acquired by Rekya Mart Inc., which has a fiscal year ending on December 31: Year 1 Apr. 1. Purchased $66,000 of Smoke Bay 7%, 10-year bonds at their face amount plus accrued interest of $770. The bonds pay interest semiannually on February 1 and August 1. May 16. Purchased $112,000 of Geotherma Co. 6%, 12-year bonds at their face amount plus accrued interest of $280. The bonds pay interest semiannually on May 1 and November 1. Aug. 1. Received semiannual interest on the Smoke Bay bonds. Sept. 1. Sold $26,400 of Smoke Bay bonds at 104 plus accrued interest of $154. Nov. 1. Received semiannual interest on the Geotherma Co. bonds. Dec. 31 Accrued $924 interest on Smoke Bay bonds. Dec. 31 Accrued $560 interest on Geotherma Co. bonds. Year 2 Feb. 1.…
- 3 N is Prepare Garzon Company's journal entries to record the following transactions for the current year. January 1 Purchases 8.5% bonds (as a held-to-maturity investment) issued by PBS at a cost of $52,800, which is the par value. June 30 Receives first semiannual payment of interest from PBS bonds. December 31 Receives a check from PBS in payment of principal ($52,800) and the second semiannual payment of interest. View transaction list Journal entry worksheet 1 2 3 Purchases 8.5% bonds (as a held-to-maturity investment) issued by PBS at a cost of $52,800, which is the par value. Date January 01 Note: Enter debits before credits. General Journal *** Debit CreditTransactions for Bond (Held-to-Maturity) Investments Rekya Mart Inc. is a general merchandise retail company that began operations on January 1, 2OY5. The following are bond (held-to-maturity) transactions by Rekya Mart Inc., which has a fiscal year ending on December 31: 20Y5 Apr. 1. Purchased $36,000 of Smoke Bay 5%, 10-year bonds at their face amount plus accrued interest of $300. The bonds pay interest semiannually on February 1 and August 1. Purchased $114,000 of Geotherma Co. 6%, 12-year bonds at their face amount plus accrued interest of $285. The bonds pay interest semiannually on May 1 and November May 16. 1. Aug. 1. Received semiannual interest on the Smoke Bay bonds. Sept. Sold $14,400 of Smoke Bay bonds at 103 plus accrued interest of $60. 1. Nov. 1. Received semiannual interest on the Geotherma Co. bonds. Dec. 31 Accrued interest on the Smoke Bay bonds. Dec. 31 Accrued interest on the Geotherma Co. bonds. 20Y6 Feb. 1. Received semiannual interest on the Smoke Bay bonds.…A company purchased $30,000 of 5% bonds for investment purposes on May 1. The bonds pay interest on February 1 and August 1. The amount of interest revenue accrued at December 31 (the company’s year-end) is a. $1,500. c. $1,000. e. $300. b. $1,375. d. $625.
- > Entries for bond (held-to-maturity) investments The following bond investment transactions were completed by Starks Company: Jan. 31 Purchased 24, $1,000 government bonds at 100 plus accrued interest of $120 (1 month). The bonds pay 6% annual interest on July 1 and January 1. Received semiannual interest on bond investment. Sold 9, $1,000 bonds at 98 plus $90 accrued interest (2 months). July 1 Aug. 30 a. Journalize the entries for these transactions. Assume a 360-day year. Do not round interim calculations. Round final answers to nearest dollar. If an amount box does not require an entry, leave it blank. Jan. 31 Investments-Government Bonds Interest Receivable ✓✓ Cash ✓ July 1 Cash ✓ Interest Receivable Interest Revenue Aug. 30 Cash Loss on Sale of Investments Interest Revenue ✓ 000 000 000 100 000 000 24,000 8,910 24,100 XEntries for Investment in Bonds, Interest, and Sale of Bonds Gonzalez Company acquired $157,200 of Walker Co., 5% bonds on May 1 at their face amount. Interest is paid semiannually on May 1 and November 1. On November 1, Gonzalez Company sold $46,200 of the bonds for 95. Journalize entries to record the following in Year 1: For a compound transaction, if an amount box does not require an entry, leave it blank. a. The initial acquisition of the bonds on May 1. May 1 b. The semiannual interest received on November 1. Nov. 1 c. The sale of the bonds on November 1. Nov. 1 d. The accrual of $925 interest on December 31. Dec. 31 Check My WorkLancaster Company carried out the following transactions in bond investments held for trading during the current year. March 1 Purchased 1,000, P1,000, 12% bonds of Jerald Company at 90 plus accrued interest. The bonds pay interest semiannually on July 1 and December 31. March 31 Purchased 3,000, P1,000, 12% bonds of Jason Company at 105 plus accrued interest. Semiannual payment of interest is February 28 and August 31. November 30 Sold 1,000 of the Jason Company at 110 plus accrued interest. December 31 The following quotations were obtained: Jerald Company 101 Jason Company 95 Required: Compute for the gain or loss on selling Jason Company bonds. Compute for the ending balance of the investment in bonds held for training. Compute for the unrealized gain or loss. Explain where to present the unrealized gains or loss and gain or loss from selling the bond investment held for trading.
- Lancaster Company carried out the following transactions in bond investments held for trading during the current year. March 1 Purchased 1,000, P1,000, 12% bonds of Jerald Company at 90 plus accrued interest. The bonds pay interest semiannually on July 1 and December 31. March 31 Purchased 3,000, P1,000, 12% bonds of Jason Company at 105 plus accrued interest. Semiannual payment of interest is February 28 and August 31. November 30 Sold 1,000 of the Jason Company at 110 plus accrued interest. December 31 The following quotations were obtained: Jerald Company 101 Jason Company 95 Required: Journalize the transactions. Compute for the gain or loss on selling Jason Company bonds. Compute for the ending balance of the investment in bonds held for training. Compute for the unrealized gain or loss. Explain where to present the unrealized gains or loss and gain or loss from selling the bond investment held for…Entries for bond (held-to-maturity) investments The following bond investment transactions were completed by Starks Company: Purchased 33, $1,000 government bonds at 100 plus accrued interest of $165 (1 month). The bonds pay 6% annual interest on July 1 and January 1. Received semiannual interest on bond investment. Sold 12, $1,000 bonds at 96 plus $120 accrued interest (2 months). Jan. 31 July 1 Aug. 30 a. Journalize the entries for these transactions. Assume a 360-day year. Do not round interim calculations. Round final answers to nearest dollar. If an amount box does not require an entry, leave it blank. Jan. 31 July 1 Aug. 30 b. Journalize the December 31 adjusting entry for semiannual interest earned on the bonds. Assume a 360-day year. Do not round interim calculations. Round final answers to nearest dollar. If an amount box does not require an entry, leave it blank. Dec. 31 c. Journalize the receipt of $21,000 at the bonds' maturity on July 1. If an amount box does not require…Entries for bonds payable, including bond redemptionThe following transactions were completed by Montague Inc., whosefiscal year is the calendar year: 20Y1 July 1. Issued $55,000,000 of 10-year, 9% callable bonds dated July 1,20Y1, at a market (effective) rate of 7%, receiving cash of $62,817,040.Interest is payable semiannually on December 31 and June 30. Dec. 31. Paid the semiannual interest on the bonds. The bonddiscount amortization of $390,852 is combined with the semiannualinterest payment. 20Y2 June 30. Paid the semiannual interest on the bonds. The bonddiscount amortization of $390,852 is combined with the semiannualinterest payment. Dec. 31. Paid the semiannual interest on the bonds. The bonddiscount amortization of $390,852 is combined with the semiannualinterest payment. 20Y3June 30. Recorded the redemption of the bonds, which were called at103. The balance in the bond premium account is $6,253,632 afterpayment of interest and amortization of premium have been recorded.…