Presented below is an amortization schedule related to Ivanhoe Company’s 5-year, $160,000 bond with a 7% interest rate and a 5% yield, purchased on December 31, 2015, for $173,855.
The following schedule presents a comparison of the amortized cost and fair value of the bonds at year-end.
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Question & Answer: Presented below is an amortization schedule related to Ivanhoe Company’s 5-year, $160,000 bond with a 7…..
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|(a)||Prepare the journal entry to record the purchase of these bonds on December 31, 2015, assuming the bonds are classified as held-to-maturity securities.|
|(b)||Prepare the journal entry related to the held-to-maturity bonds for 2016.|
|(c)||Prepare the journal entry related to the held-to-maturity bonds for 2018.|
|(d)||Prepare the journal entry to record the purchase of these bonds, assuming they are classified as available-for-sale.|
|(e)||Prepare the journal entries related to the available-for-sale bonds for 2016.|
|(f)||Prepare the journal entries related to the available-for-sale bonds for 2018.|
|(a)||Dec. 31, 2015||Held-to-maturity securities||1,73,855|
|(b)||Dec. 31, 2016||Cash||11,200|
|(c)||Dec. 31, 2018||Cash||11,200|
|(d)||Dec. 31, 2015||Available-for-sale securities||1,73,855|
|(e)||Dec. 31, 2016||Cash||11,200|
|Dec. 31, 2016||Unrealized Holding Gain or Loss—Equity||548|
|Securities Fair Value Adjustment (AFS)||548|
|($171,348 – $170,800)|
|(f)||Dec. 31, 2018||Cash||11,200|
|Dec. 31, 2018||Securities Fair Value Adjustment (AFS)||1,849|
|Unrealized Holding Gain or Loss—Equity||1,849|