Problemon november 30 2015 jordan inc purchased a 300000, Ask an Expert

Accounting

Problem

On November 30, 2015, Jordan Inc. purchased a $300,000 5-year bond with a 3% stated interest rate from the issuer. Given the yield on the bond was 2%, Jordan paid $314,140.38 for the bond.

Interest is paid annually on November 30. Jordan uses the fair value through net income (FV-NI) model to account for this investment. At December 31, 2015, the fair value of the bond was $313,000, and at December 31, 2016, the fair value was $312,000. Jordan has an accounting policy of recognizing interest earned separately from fair value adjustments.

Required (Round to the nearest cent.):

Prepare the journal entries required for this investment for 2015.

Prepare the journal entries required for this investment for 2016.

Assuming the investment is sold on March 31, 2017 for $310,000 plus accrued interest, prepare the journal entries required for this investment in 2017.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M92770215

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