Brief Exercise 171 Your answer is partially correct Try agai

Brief Exercise 17-1 Your answer is partially correct. Try again. Monty Company purchased, on January 1, 2017, as a held-to-maturity investment, $85,000 of the 10%, 5- year bonds of Chester Corporation for $78,873, which provides an 12% return. Prepare Monty\'s journal entries for (a) the purchase of the investment, and (b) the receipt of annual interest and discount amortization. Assume effective-interest amortization is used. (Round answers to 0 decimal places, e.g. 1,225. Credit account titles are automatically indented when 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.) Click if you would like to Show Work for this question: Open Show Work

Solution

Journal Entry Date Particualrs Dr. Amt Cr. Amt 1-Jan-17 Debt Investment (Held-to-maturity)                 78,873 Cash                   78,873 (record the purchase of bonds) 31-Dec-17 Cash                    8,500 Debt Investment (Held-to-maturity)                       965 Interest Revenue                     9,465 (record the Interest recived on bonds) 31-Dec-18 Cash                    8,500 Debt Investment (Held-to-maturity)                    1,081 Interest Revenue                     9,581 (record the Interest recived on bonds) 31-Dec-19 Cash                    8,500 Debt Investment (Held-to-maturity)                    1,210 Interest Revenue                     9,710 (record the Interest recived on bonds) 31-Dec-20 Cash                    8,500 Debt Investment (Held-to-maturity)                    1,355 Interest Revenue                     9,855 (record the Interest recived on bonds) 31-Dec-21 Cash                    8,500 Debt Investment (Held-to-maturity)                    1,516 Interest Revenue                   10,016 (record the Interest recived on bonds) 31-Dec-21 Cash                 85,000 Debt Investment (Held-to-maturity)                   85,000 (Record the bond matured) Amortization Schedule Effective Interest Method A B C D E Annual Interest Period Interest Received - $85,000 X 10% Interest Revenue - Preceeding Bond Carrying Value X 12% Discount Amortization (B - A) Unamortized Discount (D - C) Bond Carrying Amount ($85,000 - D) 1-Jan-17                                  -                                          -                              -                    6,127                    78,873 31-Dec-17                           8,500                                 9,465                         965                  5,162                    79,838 31-Dec-18                           8,500                                 9,581                     1,081                  4,082                    80,918 31-Dec-19                           8,500                                 9,710                     1,210                  2,872                    82,128 31-Dec-20                           8,500                                 9,855                     1,355                  1,516                    83,484 31-Dec-21                           8,500                              10,016                     1,516                           0                    85,000