Business, 19.09.2021 01:00 ashiteru123
On January 1, 2020, Novotna Company purchased $1,000,000, 6% bonds of Aguirre Co. for $947,574. The bonds were purchased to yield 8% interest. Interest is payable semiannually on July 1 and January 1. The bonds mature on January 1, 2023. Novotna Company uses the effective-interest method to amortize discount or premium. Assume that the bond is classified as available for sale.
a. Prepare the amortization schedule for the bond. (20 points)
b. Prepare the journal entries to record the semiannual interest on July 1, 2020, and January 1, 2022. (20 points)
c. If the fair value of Aguirre bonds is $975,122 on December 31, 2021, prepare the necessary adjusting entry. (Assume that the fair value adjustment balance on December 31, 2020, is a debit of $3,000.) (20 points)
d. If the fair value of Aguirre bonds is $1,050,000 on December 31, 2022, prepare the necessary adjusting entry. (40 points)
Answers: 1
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On January 1, 2020, Novotna Company purchased $1,000,000, 6% bonds of Aguirre Co. for $947,574. The...
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