Business, 22.02.2020 02:26, isabhb4227
On January 1, 2017, Panorama Company purchased $400,000, 8% bonds. The bonds were purchased to yield 10% interest.
Interest is payable semiannually on July 1 and January 1 with the first interest payment to occur on July 1, 2017.
The bonds mature on January 1, 2022. Panorama Company uses the effective-interest method to amortize discount or premium.
Panorama Company classifies the bonds as available-for-sale.
On January 1, 2019, Panorama Company sold the bonds for $370,726 after receiving interest to meet its liquidity needs.
Required:
(a) Determine the purchase price and prepare the journal entry to record the purchase of bonds on January 1, 2017.
(b) Prepare the amortization schedule for the bonds.
(c) Prepare the journal entries to record/accrue the semiannual interest each period.
(d) The fair value of the bonds is $372,726 on December 31, 2018, prepare the necessary adjusting entry.
Note that the fair value adjustment balance on December 31, 2017, is a debit of $3,375.
(e ) Prepare the journal entry to record the sale of the bonds on January 1, 2019.
Answers: 3
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On January 1, 2017, Panorama Company purchased $400,000, 8% bonds. The bonds were purchased to yield...
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