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Debt Securities Presented below is an amortization schedule related to Spangler Company’s 5-year $100,000 bond with a 7% interest rate and a 5% yield purchased on December

(Debt Securities) Presented below is an amortization schedule related to Spangler Company’s

5-year, $100,000 bond with a 7% interest rate and a 5% yield, purchased on December 31, 2012, for $108,660.

 

 

Date

 

Cash

Received

 

Interest

Revenue

 

Bond Premium

Amortization

 

Carrying Amount of Bonds

12/31/12

 

 

 

 

 

 

 

$108,660

12/31/13

 

$7,000

 

$5,433

 

$1,567

 

107,093

12/31/14

 

7,000

 

5,354

 

1,646

 

105,447

12/31/15

 

7,000

 

5,272

 

1,728

 

103,719

12/31/16

 

7,000

 

5,186

 

1,814

 

101,905

12/31/17

 

7,000

 

5,095

 

1,905

 

100,000

 

The following schedule presents a comparison of the amortized cost and fair value of the bonds at year-end.

 

 

12/31/13

 

12/31/14

 

12/31/15

 

12/31/16

 

12/31/17

Amortized cost

$107,093

 

$105,447

 

$103,719

 

$101,905

 

$100,000

Fair value

$106,500

 

$107,500

 

$105,650

 

$103,000

 

$100,000

 

Instructions

(a) Prepare the journal entry to record the purchase of these bonds on December 31, 2012, assuming the bonds are classified as held-to-maturity securities.

(b) epa e the journal entry(ies) elated to the held-to-maturity bonds for 2013.

(c) epa e the journal entry(ies) elated to the held-to-maturity bonds for 2015.

(d) epa the journal entry(ies) to eco the pu chase of these bonds, assuming they classified as

available-fo -sale.

(e) epa e the journal entry(ies) elated to the available-fo -sale bonds for 2013.

(f) epa e the journal entry(ies) elated to the available-fo -sale bonds for 2015.

Jun 18 2020 View more View Less

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