Acc423 Intermediate Accounting: P17-1 Presented below is an amortization schedule related to

Acc423 Intermediate Accounting
Week 3 Assignment

P17-1 Debt Securities
Presented below is an amortization schedule related to Spangler Company's 5-year, $100,000 bond with a 7% interest rate and 5% yield, purchased on December 31, 2008, for $108,660.

Date Cash Received Interest Revenue Bond Premium Amortization Carrying Amount of Bonds

12/31/2008 108,660

12/31/2009 7,000 5.433 1.567 107,093

12/31/2010 7,000 5,354 1,646 105,447

12/31/2011 7,000 5,272 1,728 103,719

12/31/2012 7,000 5,186 1,814 101,905

12/31/2013 7,000 5,095 1,905 100,000

The following schedule presents a comparison of the amortized cost and fair value of the bonds at year-end.

12/31/2009 12/31/2010 12/31/2011 12/31/2012

Amortized Cost 107,093 105,447 103,719 101,905

Fair Value 106,500 107,500 105,650 103,000



Instructions:
(a) Prepare the journal entry to record the purchase of these bonds on December 31, 2008, assuming the bonds are classified as held-to-maturity securities.
(b) Prepare the journal entry(ies) related to the held-to-maturity bonds for 2009.
(c) Prepare the journal entry(ies) related to the held-to-maturity bonds for 2011.
(d) Prepare the journal entry(ies) to record the purchase of these bonds, assuming they are classified as available-for-sale.
(e) Prepare the journal entry(ies) related to the available-for-sale bonds for 2009.
(f) Prepare the journal entry(ies) related to the available-for-sale bonds for 2011
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