- A On 1 January 2021 Barrow Limited Purchased A 250 000 8 Bond At 231 046 With Effective Interest Rate Being 10 1 (87.08 KiB) Viewed 33 times
A. On 1 January 2021, Barrow Limited purchased a $250,000, 8% bond at $231,046, with effective interest rate being 10%.
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A. On 1 January 2021, Barrow Limited purchased a $250,000, 8% bond at $231,046, with effective interest rate being 10%.
A. On 1 January 2021, Barrow Limited purchased a $250,000, 8% bond at $231,046, with effective interest rate being 10%. Interest is payable annually at the end of each calendar year. The bond will mature on 31 December 2025. The bond is purchased as a held-for-collection and selling investment. On 31 December 2021, the fair value of the bond is $237,000. On 1 March 2022, Barrow Limited sells its bond for $240,000 excluding accrued interest. Required: (Round all amounts to the nearest dollar.) (a) Prepare all the relevant journal entries for the bond for year 2021. (9 marks) (b) Prepare all the relevant journal entries to record the sale of the bond on 1 March 2022. (9 marks) (c) Discuss the difference of the accounting treatment if Barrow Limited classified the bond as trading security. (2 marks)