Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. reporting bonds using the fair value option mitch

Reporting Bonds Using the Fair Value Option Mitchell Inc. issued 52 of its 6%,...

90.2K

Verified Solution

Question

Accounting

Reporting Bonds Using the Fair Value Option

Mitchell Inc. issued 52 of its 6%, $1,000 bonds on January 1 of Year 1 for $50,614. The bonds pay cash interest semiannually each June 30 and December 31 and were issued to yield 7%. The bonds mature in three years on December 31, and the company uses the effective interest method to amortize bond discounts or premiums. On January 1 of Year 1, Mitchell Inc. elects to account for the bonds using the fair value option.

a. Record the issuance of bonds on January 1 of Year 1. b. Record the interest payment on June 30 of Year 1. c. Record the interest payment on December 31 of Year 1. d. At December 31 of Year 1, the market rate on the bonds drops to 7.5% due to a general increase in market risk. Record the adjustment of bonds payable to fair value.

Note: Round your answers to the nearest whole dollar.

Date Account Name Dr. Cr.
a. Jan. 1, Year 1 Answer
Answer
Answer
To record the issuance of bonds.
b. June 30, Year 1 Answer
Answer
Answer
c. Dec. 31, Year 1 Answer
Answer
Answer
d. Dec. 31, Year 1 Answer
Answer
To record the adjustment of bonds payable.

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

Chemistry
1.2K views

Are HCP metals typically more or less ductile than BCC metals? Why?

Electrical Engineering
1.2K views

Input pin(s): inputw [1], sysclock [1] Output pin(s): outputq [1] Design a 3-bit parity generator using a...

General Management
1.2K views

Discuss the following situation: Your marketing manager has just told you she plans to dismiss her...

Biology
1.2K views

Which is NOT true of smooth muscle? A. They use peristalsis to move substances through...

Basic Math
1.2K views

A 9 4 9 7 11 A 9B 2 B 2 1 7 1 6...

Basic Math
1.2K views

M N O P Q F MATH1507 M N O P Q R S Mathe...

Basic Math
1.2K views

Solve the compound inequality.0<2x+2?8Select the correct choice below and, if necessary, fill in the answer...

Statistics
1.2K views

The distribution of the runtimes of all movies is known to be skewed to the...

Statistics
1.2K views

On a survey 7 students reported how many minutes it takes them to travel to...

Algebra
1.2K views

real zeros for the function 2x 3 8x 2 6x 5 0

Accounting
1.2K views

48. Shareholders in S Corporations must be: a. individuals...

Accounting
1.2K views

HelloWorld owns a press used in the production of fine paper products. The press originally...