On January 1, 2013, Greeninc. purchased a $600,000 12%, 5 year, bond for $645,48
ID: 2460929 • Letter: O
Question
On January 1, 2013, Greeninc. purchased a $600,000 12%, 5 year, bond for $645,488.88.The bond provides a return of 10% with interest receivable at December 31 of each year. The bonds are classified as available for sale and they are classified as available for sale. The fair value of the bonds at December 31 of each year-end is as follows: 2013 $641,000 2014 $618,000 2015 $616,000 2016 $320,000 2017 $600,000
a. Prepare the journal entry to record the purchase of the bond
b. Prepare journal entry to record the interest received and recognition of fair value for 2013
c. Prepare journal entry to record recognition of fair value for 2014
Explanation / Answer
Date Account Titles Debit Credit $ $ January 1, 2013 Investment in available for sale securities 645,488.88 Cash 645,488.88 December 31 2013 Cash 72,000 Interest revenue 72,000 Other comprehensive income 4,488.88 Investment in available for sale securities 4,488.88 December 31 2014 investment in available for sale securities 7,000 Other comprehensive income 7,000
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