During 2023, Culver Inc. purchased 2200, $1000, 7% bonds. The bonds mature on March 1, 2028 and pay interest on March 1 and September 1. The carrying value of the bonds at December 31, 2023 was S 1967500. on September 1, 2024, after the semi-annual interest was received, Brandon sold half of these bonds for $1007000. Culver uses straight-line amortization and has accounted for the bonds under the amortized cost mode.The gain on the sale is $23250 $41850 $0 $4650
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- On January 1, 2019, Brewster Company issued 2,000 of its 5-year, 1,000 face value, 11% bonds dated January 1 at an effective annual interest rate (yield) of 9%. Brewster uses the effective interest method of amortization. On December 31, 2023, Brewster extinguished the 2,000 bonds early through acquisition in the open market for 1,980,000. On July 1, 2022, Brewster issued 5,000 of its 6-year, 1,000 face value, 10% convertible bonds dated July 1 at an effective annual interest rate (yield) of 12%. The bonds are convertible at the option of the investor into Brewsters common stock at a ratio of 10 shares of common stock for each bond. Brewster uses the effective interest method of amortization. On July 1, 2023, an investor in Brewsters convertible bonds tendered 1,500 bonds for conversion into 15,000 shares of Brewsters common stock, which had a market value of 105 per share at the date of the conversion. Required: 1. Using the information about Brewster, answer the following questions: a. Were the 11% bonds issued at par, at a discount, or at a premium? Why? b. Is the amount of interest expense for the 11% bonds using the effective interest method of amortization higher in the first or second year of the life of the bond issue? Why? 2. Using the information about Brewster, explain the following: a. How is a gain or loss on early extinguishment of debt determined? Does the early extinguishment of the 11% bonds result in a gain or loss? Why? b. How does Brewster report the early extinguishment of the 11% bonds on the 2023 income statement? 3. Based on the information provided about Brewster, answer the following questions: a. Does recording the conversion of the 10% convertible bonds into common stock under the book value method affect net income? What is the rationale for the book value method? b. Does recording the conversion of the 10% convertible bonds into common stock under the market value method affect net income? What is the rationale for the market value method?On January 1, 2025, Culver Company purchased $280,000, 6% bonds of Aguirre Co. for $ 257, 289. The bonds were purchased to yield 8% interest. Interest is payable semiannually on July 1 and January 1. The bonds mature on January 1, 2030. Culver Company uses the effective - interest method to amortize discount or premium. On January 1, 2027, Culver Company sold the bonds for $258,816 after receiving interest to meet its liquidity needs. /25/25 $/26/26 - /27/27/28/28 1/1/297/1/291/1/30 Tatal 1During 2023, Monty Inc. purchased 2400, $1000, 9% bonds. The bonds mature on March 1, 2028 and pay interest on March 1 and September 1. The carrying value of the bonds at December 31, 2023 was $1967250. On September 1, 2024, after the semi-annual interest was received, Brandon sold half of these bonds for $1021600. Monty uses straight-line amortization and has accounted for the bonds under the amortized cost model. The gain on the sale is $72595. $0. $3355. $37975.
- On January 1, 2025, Sheffield Company purchased $410,000, 8% bonds of Aguirre Co, for $378,339. The bonds were purchased to yield 10% interest. Interest is payable semiannually on July 1 and January 1. The bonds mature on January 1, 2030. Sheffield Company uses the effective-interest method to amortize discount or premium. On January 1, 2027, Sheffield Company sold the bonds for $380,070 after receiving interest to meet its liquidity needs.On January 1, 2025, Oriole Company purchased $230,000, 6% bonds of Winds Co. for $240,065. The bonds were purchased to yield 5% interest. Interest is payable semiannually on July 1 and January 1. The bonds mature on January 1, 2030. Oriole Company uses the effective-interest method to amortize discount or premium. On January 1, 2027, Oriole Company sold the bonds for $234,565 after receiving interest to meet its liquidity needs. (a) Your answer has been saved. See score details after the due date. Prepare the journal entry to record the purchase of bonds on January 1. Assume that the bonds are classified as available-for-sale. (Credit account titles are automatically Indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account titles and enter O for the amounts. List debit entry before credit entry)On January 1, 2025, Copa Company purchased $300,000, 6% bonds of Cabana Co. for $313,128. The bonds were purchased to yield 5% interest. Interest is payable semiannually on July 1 and January 1. The bonds mature on January 1, 2030. Copa Company uses the effective-interest method to amortize discount or premium. On January 1, 2027, Copa Company sold the bonds for $305,600 after receiving interest to meet its liquidity needs. (a) Prepare the journal entry to record the purchase of bonds on January 1. Assume that the bonds are classified as available-for-sale. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List debit entry before credit entry.) Date Jan. 1, 2025 Account Titles and Explanation Debit Credit
- On January 1, 2022, Isabel Company purchased bonds with face amount of P8,000,000 for P7,679,000 to be held to maturity. The stated rate on the bonds is 10% but the bonds are acquired to yield 12%. The bonds mature at the rate of P2,000,000 annually every December 31 and the interest is payable annually also every December 31. The entity used the effective interest method of amortizing discount. What is the carrying amount of the bond investment on December 31, 2022? A. 5,759,250 B. 7,759,250 C. 7,800,480 D. 5,800,480On January 1, 2020, Hole Company purchased 600 of $1,000 face value, 8% bonds of Lid Corp., for $553,670, to yield 10%. The bonds, which mature on January 1, 2025, pay interest semiannually on January 1 and July 1. Assuming that Hole uses the straight-line method of amortization and that the bonds are accounted for under the amortized cost method, the net carrying value of the bonds should be shown on Hole’s December 31, 2020, statement of financial position at $553,670 $600,000 $557,351 $562,936Garland Company received proceeds of $131600 on 10-year, 6% bonds issued on January 1, 2018. The bonds had a face value of $140000, pay interest annually on January 1, and have a call price of 101. Garland uses the straight-line method of amortization.What is the carrying value of the bonds on January 1, 2020?
- On January 1, 2023, Liu Corporation paid $245,928 to acquire bonds of Singh Investment Corp with a par value of $244,000. The annual contract rate on the bonds is 8.0% and interest is paid semiannually on June 30 and December 31. The bonds mature after three years. The market rate of interest was 7.7%. Liu Corporation intends to hold the bonds until maturity. Required: 1. Prepare an amortization schedule for the investment showing only 2023.On January 1, 2020, Garland Company purchased bonds with a face amount of P8,000,000 for P7,679,000 to be measured at amortized cost. The stated rate on the bonds is 10% but the bonds are acquired to yield 12%. The bonds mature at the rate of P2,000,000 annually every December 31 and the interest is payable annually also every December 31. The entity uses the effective interest method of amortizing discount. Required: Prepare an amortization schedule. Prepare necessary journal entries.On January 1, 2023, Pronghorn Limited pays $105,753 to purchase $110,000 of Chan Corporation 9% bonds. The market rate of interest at the time was 10%. Pronghorn accounts for this investment at amortized cost using the effective interest method. The bonds mature on January 1, 2028, and interest is payable each July 1 and January 1. Note that the bond is acquired on an interest payment date and there is therefore no accrued interest for Pronghorn to pay on January 1. Pronghorn has an August 31 year end (a) * Your answer is incorrect. Calculate the amortization of the discount per month using the straight-line method. (Round answer to 2 decimal places, eg 125.55) SUPPOR