P17-1 - (d) Prepare the journal entry(ies) to record the...

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P17-1 (Debt Securities) Presented below is an amortization schedule related to Kathy Baker Company’s 5-year, $100,000 bond with a 7% interest rate and a 5% yield, purchased on December 31, 2004, for $108,660 Cash Interest ond Premium arrying Amount Date Received Revenue Amortization of Bonds 12/31/04 108,660 12/31/05 7,000 5,433 1,567 107,093 12/31/06 7,000 5,354 1,646 105,447 12/31/07 7,000 5,272 1,728 103,719 12/31/08 7,000 5,186 1,814 101,905 12/31/09 7,000 5,095 1,905 100,000 The following schedule presents a comparison of the amortized cost and fair value of the bonds at year-end. 12/31/05 12/31/06 12/31/07 12/31/08 12/31/09 Amortized c 107,093 105,447 103,719 101,905 100,000 Fair value 106,500 107,500 105,650 103,000 100,000 Instructions (a) Prepare the journal entry to record the purchase of these bonds on December 31, 2004, assuming the bonds are classified as held-to-maturity securities. (b) Prepare the journal entry(ies) related to the held-to-maturity bonds for 2005. (c) Prepare the journal entry(ies) related to the held-to-maturity bonds for 2007.
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Unformatted text preview: (d) Prepare the journal entry(ies) to record the purchase of these bonds, assuming they are classified as available-for-sale. (e) Prepare the journal entry(ies) related to the available-for-sale bonds for 2005. (f) Prepare the journal entry(ies) related to the available-for-sale bonds for 2007. [a] 12/31/04 Held-to-Maturity Securities 108,660 Cash 108,660 [b] 12/31/05 Cash 7,000 Held-to-Maturity Securities 1,567 Interest Revenue 5,433 [c] 12/31/07 Cash 7,000 Held-to-Maturity Securities 1,728 Interest Revenue 5,272 [d] 12/31/04 Available-for-Sale Securities 108,660 Cash 108,660 [e] 12/31/05 Cash 7,000 Available-for-Sale Securities 1,567 Interest Revenue 5,433 Unrealized Holding Gain or Loss - E 593 Securities Fair Value Adjustment 593 [f] 12/31/07 Cash 7,000 Available-for-Sale Securities 1,728 Interest Revenue 5,272 Unrealized Holding Gain or Loss - E 122 Securities Fair Value Adjustment 122...
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This note was uploaded on 02/22/2012 for the course ACC 101 taught by Professor Black during the Spring '12 term at University of Phoenix.

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