I need the answer of e Thank you so much On January I, 2018, Novotna Company pur
ID: 2330386 • Letter: I
Question
I need the answer of e Thank you so much On January I, 2018, Novotna Company purchased €400,000, 8% bonds of Aguirre Co. for €369,114. The bonds were purchased to yield 10% interest. Interest is payable semiannually on July 1 and January 1. The bonds mature on January 1, 2023. Novotna Company plans to hold the bonds to collect contractual cash flows. On January I, 2020, after receiving interest, Novotna Company sold the bonds for €370,726 after receiving interest to meet its liquidity needs.e) Prepare the journal entry to record the sale of the bonds on January 1, 2020.
I need the answer of e Thank you so much On January I, 2018, Novotna Company purchased €400,000, 8% bonds of Aguirre Co. for €369,114. The bonds were purchased to yield 10% interest. Interest is payable semiannually on July 1 and January 1. The bonds mature on January 1, 2023. Novotna Company plans to hold the bonds to collect contractual cash flows. On January I, 2020, after receiving interest, Novotna Company sold the bonds for €370,726 after receiving interest to meet its liquidity needs.
e) Prepare the journal entry to record the sale of the bonds on January 1, 2020.
On January I, 2018, Novotna Company purchased €400,000, 8% bonds of Aguirre Co. for €369,114. The bonds were purchased to yield 10% interest. Interest is payable semiannually on July 1 and January 1. The bonds mature on January 1, 2023. Novotna Company plans to hold the bonds to collect contractual cash flows. On January I, 2020, after receiving interest, Novotna Company sold the bonds for €370,726 after receiving interest to meet its liquidity needs.
e) Prepare the journal entry to record the sale of the bonds on January 1, 2020.
Explanation / Answer
e January 1, 20120 sale entry: Selling price of bonds € 370,726 Less: Amortized cost (see schedule from (b)) 379,699 Realized loss on sale of investment -€ 8,973 Date Account titles annd explanation Debit Credit Jan 1, 2020 Cash 370,726 Loss on Sale of Debt Investments 8,973 Debt Investments 379,699 b The amortization schedule is as follows: Schedule of Interest Revenue and Bond Discount Amortization 8% Bonds Purchased to Yield 10% Date Interest Receivable Or Cash Received Interest Revenue Bond Discount Amortization Carrying Amount of Bonds 1/1/2018 — — — € 369,114 7/1/2018 € 16,000 € 18,456 € 2,456 371,570 12/31/2018 16,000 18,579 2,579 374,149 7/1/2019 16,000 18,707 2,707 376,856 12/31/2019 16,000 18,843 2,843 379,699