8. On January 1, 2020, Pronghorn Corp. acquires $300,000 of Spider Products Inc. 7% bonds at a price of $277,618. The in
Posted: Sat Mar 19, 2022 5:43 pm
8. On January 1, 2020, Pronghorn Corp. acquires
$300,000 of Spider Products Inc. 7% bonds at a price of
$277,618. The interest is payable each December 31, and the bonds
mature on December 31, 2022. The investment will
provide Pronghorn Corp. with a 10%
yield. Pronghorn Corp. applies IFRS and accounts for this
investment using the amortized cost model.
A) Prepare a three-year bond amortization
schedule. (Round answers to 0 decimal places, e.g.
5,275.)
01/01/20
12/31/20
12/31/21
12/31/22
B) Prepare the journal entry to record interest received and
interest income on December 31, 2021. (Credit
account titles are automatically indented when the amount is
entered. Do not indent manually. If no entry is required, select
"No Entry" for the account titles and enter 0 for the amounts.
Round answers to 0 decimal places, e.g. 5,275.)
Date
Account Titles and Explanation
Debit
Credit
Dec 31, 2021
enter an account title for the journal entry on December 31
enter a debit amount
enter a credit amount
enter an account title for the journal entry on December 31
enter a debit amount
enter a credit amount
enter an account title for the journal entry on December 31
enter a debit amount
enter a credit amount
C) Prepare the journal entries to record interest received and
interest income on December 31, 2022, and the maturity of the
bond. (Credit account titles are automatically
indented when the amount is entered. Do not indent manually. If no
entry is required, select "No Entry" for the account titles and
enter 0 for the amounts. Round answers to 0 decimal places, e.g.
5,275.)
Date
Account Titles and Explanation
Debit
Credit
Dec 31, 2022
enter an account title to record collection of interest on
December 31
enter a debit amount
enter a credit amount
enter an account title to record collection of interest on
December 31
enter a debit amount
enter a credit amount
enter an account title to record collection of interest on
December 31
enter a debit amount
enter a credit amount
Dec 31, 2022
enter an account title to record maturity of bond investment on
December 31
enter an account title to record maturity of bond investment on
December 31
D) Prepare the entry for the disposal of the investment
if Pronghorn had sold the bond on December 31, 2021 for
$283,300 instead of holding it to maturity. Assume that 2021
interest received and interest income have already been
recorded. (Credit account titles are automatically
indented when the amount is entered. Do not indent manually. If no
entry is required, select "No Entry" for the account titles and
enter 0 for the amounts. Round answers to 0 decimal places, e.g.
5,275.)
Account Titles and Explanation
Debit
Credit
enter an account title
enter a debit amount
enter a credit amount
enter an account title
enter a debit amount
enter a credit amount
enter an account title
enter a debit amount
enter a credit amount
$300,000 of Spider Products Inc. 7% bonds at a price of
$277,618. The interest is payable each December 31, and the bonds
mature on December 31, 2022. The investment will
provide Pronghorn Corp. with a 10%
yield. Pronghorn Corp. applies IFRS and accounts for this
investment using the amortized cost model.
A) Prepare a three-year bond amortization
schedule. (Round answers to 0 decimal places, e.g.
5,275.)
01/01/20
12/31/20
12/31/21
12/31/22
B) Prepare the journal entry to record interest received and
interest income on December 31, 2021. (Credit
account titles are automatically indented when the amount is
entered. Do not indent manually. If no entry is required, select
"No Entry" for the account titles and enter 0 for the amounts.
Round answers to 0 decimal places, e.g. 5,275.)
Date
Account Titles and Explanation
Debit
Credit
Dec 31, 2021
enter an account title for the journal entry on December 31
enter a debit amount
enter a credit amount
enter an account title for the journal entry on December 31
enter a debit amount
enter a credit amount
enter an account title for the journal entry on December 31
enter a debit amount
enter a credit amount
C) Prepare the journal entries to record interest received and
interest income on December 31, 2022, and the maturity of the
bond. (Credit account titles are automatically
indented when the amount is entered. Do not indent manually. If no
entry is required, select "No Entry" for the account titles and
enter 0 for the amounts. Round answers to 0 decimal places, e.g.
5,275.)
Date
Account Titles and Explanation
Debit
Credit
Dec 31, 2022
enter an account title to record collection of interest on
December 31
enter a debit amount
enter a credit amount
enter an account title to record collection of interest on
December 31
enter a debit amount
enter a credit amount
enter an account title to record collection of interest on
December 31
enter a debit amount
enter a credit amount
Dec 31, 2022
enter an account title to record maturity of bond investment on
December 31
enter an account title to record maturity of bond investment on
December 31
D) Prepare the entry for the disposal of the investment
if Pronghorn had sold the bond on December 31, 2021 for
$283,300 instead of holding it to maturity. Assume that 2021
interest received and interest income have already been
recorded. (Credit account titles are automatically
indented when the amount is entered. Do not indent manually. If no
entry is required, select "No Entry" for the account titles and
enter 0 for the amounts. Round answers to 0 decimal places, e.g.
5,275.)
Account Titles and Explanation
Debit
Credit
enter an account title
enter a debit amount
enter a credit amount
enter an account title
enter a debit amount
enter a credit amount
enter an account title
enter a debit amount
enter a credit amount