HW 17 - HW Ch.17 Q1) On January 1, 2006, Hummer Company...

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HW – Ch.17 Q1) On January 1, 2006, Hummer Company purchased 5% bonds, having a maturity value of $500,000, for $428,937.98. The bonds provide the bondholders with a 7% yield. They are dated January 1, 2006, and mature January 1, 2016, with interest receivable June 30 and December 31 of each year. Hummer Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category. Instructions (a) Prepare the journal entry at the date of the bond purchase. (b) Prepare the first 3 years of a bond amortization schedule. (c) Prepare the journal entry to record the interest received and the amortization for 2006. Q2) At December 31, 2006, the available-for-sale equity portfolio for Zorro Foods Corp. is as follows. Security Cost Fair Value Apple $ 33,600 $ 31,000 Banana 175,000 174,000 Citrus 59,400 68,500 Total $268,000 $273,500 December 31, 2005, securities fair value adjustment balance—Dr. 5,400 On January 20, 2007, Zorro sold Apple for $31,100. The sale proceeds are net of brokerage fees.
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This note was uploaded on 10/07/2010 for the course HIS 1000 taught by Professor Anderson during the Winter '10 term at Wayne State University.

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HW 17 - HW Ch.17 Q1) On January 1, 2006, Hummer Company...

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