Exercise 17-3 (Part Level Submission) On January 1, 2017, Wildhorse Company purc

Question

Exercise 17-3 (Part Level Submission)

On January 1, 2017, Wildhorse Company purchased 10% bonds having a maturity value of $380,000, for $410,343.38. The bonds provide the bondholders with a 8% yield. They are dated January 1, 2017, and mature January 1, 2022, with interest receivable January 1 of each year. Wildhorse Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category.

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(a)

[Partially correct answer.] Your answer is partially correct. Try again.

Prepare the journal entry at the date of the bond purchase. (Enter 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.)

Date
Account Titles and Explanation
Debit
Credit
Jan. 1, 2017
[Entry field with incorrect answer]
[Entry field with correct answer]
[Entry field with correct answer]
[Entry field with correct answer]
[Entry field with correct answer]
[Entry field with correct answer]

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Attempts: 3 of 3 used

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(b)

Prepare a bond amortization schedule. (Round answers to 2 decimal places, e.g. 2,525.25.)

Schedule of Interest Revenue and Bond Premium Amortization
Effective-Interest Method
Date
Cash
Received
Interest
Revenue
Premium
Amortized
Carrying Amount
of Bonds
1/1/17
$
$
$
$
1/1/18
1/1/19
1/1/20
1/1/21
1/1/22

Explanation / Answer

Solution a:

Solution b:

Journal Entries - Wildhorse Company Date Particulars Debit Credit 1-Jan-17 Investment in bond Dr $410,343.38        To Cash $410,343.38 (being 10% bond having face value of $380,000 purchased at premium)

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