On january 1 2013 hi and lois company purchased 13 bonds, Ask an Expert

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On January 1, 2013, Hi and Lois Company purchased 13% bonds, having a maturity value of $547,500, for $609,763.18. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2013, and mature January 1, 2018, with interest receivable December 31 of each year. Hi and Lois Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified as available-for-sale category. The fair value of the bonds at December 31 of each year-end is as follows. 2013 $606,173 2016 $518,200 2014 $515,700 2017 $547,500 2015 $512,700

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

(b) Prepare the journal entries to record the interest received and recognition of fair value for 2013.

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Financial Accounting, Accounting

Category:- Financial Accounting
Reference No.:- M91970292

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