Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. question#01: on january 1,2013, thd company purc

Question#01: On January 1,2013, THD Company purchased 12% bonds having a maturity value...

80.2K

Verified Solution

Question

Accounting

Question#01:
On January 1,2013, THD Company purchased 12% bonds having a maturity value of Tk.
300,000. The bonds provide the bondholders with a 10% yield. They are dated January 1,2013,
and mature January 1,2018, with interest receivable December 31 of each year. THD Company
uses the effective-interest method to allocate unamortized discount or premium. The securities
are classified as available-for-sale. The fair value of the bonds at December 31 of each year-end
is as follows.
2013
2015
2017
300,000
2014
Required:
(a) Indicate whether the bonds were purchased at a discount or at a premium.
(b) Prepare the journal entry at the date of the bond purchase.
(c) Prepare the journal entries to record the interest received for 2013.
(d) Prepare the adjusting entry to record the bonds at fair value at December 31,2013. The
Fair Value Adjustment account has a debit balance of Tk.1,000 prior to adjustment
(e) Prepare the journal entry to record the recognition of fair value for 2014
image

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students