Exercise 17-4 On January 1, 2017, Carla Company purchased 13% bonds, having a ma

Question

Exercise 17-4

On January 1, 2017, Carla Company purchased 13% bonds, having a maturity value of $308,000, for $330,766.44. The bonds provide the bondholders with a 11% yield. They are dated January 1, 2017, and mature January 1, 2022, with interest received on January 1 of each year. Carla Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified as available-for-sale category. The fair value of the bonds at December 31 of each year-end is as follows.

(Round answers to 2 decimal places, e.g. 2,525.25. Credit account titles are automatically indented when 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.)

y.

2017 $328,700 2020 $317,300 2018 $316,400 2021 $308,000 2019 $315,400

Explanation / Answer

Par A

Part B

Part C

Date account titles and explanation debit credit January 1, 2017 Debt investment (available-for-sale) 330,766.44 Cash 330,766.44

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