investment
On January 1, 2017, LYLE Company purchased 6% bonds, having a maturity value of $100,000, for $92,980. The bonds provide the bondholders with a 7% yield. They are dated January 1, 2017, and mature January 1, 2028, with interest receivable December 31 of each year. LYLE Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category.
Instructions:
- Prepare the journal entry at the date of the bond purchase.
- Prepare a bond amortization schedule by using effective interest method.
- Prepare the journal entry to record the interest received and the amortization for ALL years.
- Record the journal entry at the date of selling the bond.
Question 2:
A Corporation purchases equity securities costing $73,000 and classifies them as available-for-sale securities. At December 31, the fair value of the portfolio is $65,000.
Instructions: Prepare the adjusting entry to report the securities properly. Indicate the statement presentation of the accounts in your entry.
