Exercise 17-3 (Part Level Submission) On January 1, 2013, Hi and Lois Company pu
ID: 2456960 • Letter: E
Question
Exercise 17-3 (Part Level Submission)
On January 1, 2013, Hi and Lois Company purchased 12% bonds having a maturity value of $323,900, for $348,456.42. The bonds provide the bondholders with a 10.00% yield. They are dated January 1, 2013, and mature January 1, 2018, with interest receivable December 31 of each year. Hi and Lois Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category.
(a) and (b)
Date
Account Titles and Explanation
Debit
Credit
Schedule of Interest Revenue and Bond Premium Amortization
Effective-Interest Method
Date
Cash
Received
Interest
Revenue
Premium
Amortized
Carrying Amount
of Bonds
Exercise 17-3 (Part Level Submission)
On January 1, 2013, Hi and Lois Company purchased 12% bonds having a maturity value of $323,900, for $348,456.42. The bonds provide the bondholders with a 10.00% yield. They are dated January 1, 2013, and mature January 1, 2018, with interest receivable December 31 of each year. Hi and Lois Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category.
Explanation / Answer
Dr CR Debt Invetsment (Held to Maturity 3,48,456.42 Cash 3,48,456.42 Cash Interest Premium Carrying Amount Date Received Revenue Amortized of Bonds 01-01-2013 3,48,456.42 12/31/13 38868 34845.642 4,022.36 3,44,434.06 12/31/14 38868 34443.4062 4,424.59 3,40,009.47 12/31/15 38868 34000.94682 4,867.05 3,35,142.42 12/31/16 38868 33514.2415 5,353.76 3,29,788.66 12/31/17 38868 32978.86565 5,889.13 3,23,900
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