Reference no: EM132523451

Questions -

Q1. On Jan. 1, 20x1, ABC Co. acquired 1,000, 12%, $1,000 bonds from XYZ, Inc. for $941,726. The bonds are classified at amortized cost. The principle matures on Jan. 1, 20x5; however, interest is due to annually every Jan 1. The effective interest rate is 14%.

Requirement -

a. Prepare the amortization table.

b. How much is the unamortized discount or premium on Dec. 31, 20x2?

c. Prepare Journal entries in 20x1 and 20x2.

Q2. On Jan. 1, 20x1, ABC Co. acquired 1,000, 12%, $1,000 bonds from XYZ, Inc. for $1,075,939. The bonds are classified at amortized cost. The principle matures on Jan. 1, 20x4; however, interest is due to annually every Jan 1. The effective interest rate is 9%.

Requirement -

a. Prepare the amortization table.

Q3. On Jan. 1, 2x1, ABC co. acquires 100, 10%, 3-year, $5,000 bonds.

Requirement -

A. The bond are acquired for $428,567. Transaction cost equal to 5% of the face amount are incurred. The effective interest rate adjusted for the transaction cost is 9%.

B. The bonds are acquired for $487,656. Transaction cost equal to 5% of the face amount are incurred. The effective interest rate adjusted for the transaction cost is 9%.

Q4. On Jan. 1, 20x1, ABC Co. acquired 14%, $2,000,000 bonds for $1,996,073. The bonds mature on Dec. 31. ABC Co. incurred transaction cost of $100,000 on the acquisition. The bonds are measured at amortized cost. The effective interest rate adjusted for the effect of the transaction cost is 12%

Requirement -

a. Prepare the amortization table

b. Prepare all of the Journal entries.

Q5. Use the facts in Number 4. Assume that on September 30, 20x2, the bonds were sold for $2,400,000.

Requirement -

A. Provide the entries on the date of sale.