[Anonymous]

How do the journal entries go for the party that purchases the bond?

Example:

For Issuer:

Dr. Cash 98,000

Dr. Discount on Bonds Payable 2,000

Cr. Bonds Payable 100,000

Is the entry for the Investor:

Dr. Investment in Bonds 98,000

Cr. Cash 98,000

And the investor disregards the discount?

Also, for the interest payments, lets say they go as follows for the issuer:

Dr. Bond Interest Expense 4,000

Dr. Premium on bonds (amort) 3,000

Cr. Cash 7,000

How would the investor record this? Would it be:

Dr. Cash 7,000

Cr. Interest Revenue 7,000

Stupid becker doesn’t really give you the perspective of the investor. Appreciate the help, as my FAR exam is Thursday. Thanks in advance.

[accountabergs]

I was wondering the same thing about the prem/disc on the investor side. I'm inclined to think that you would record that, especially since (I think) recording interest revenue on the investor side includes either a reduction/addition to “Investment in Bonds”

Prem:

Dr. Cash

Cr. Investment in Bonds

Cr. Interest Revenue

Disc:

Dr. Cash

Dr. Investment in Bonds

Cr. Interest Revenue

I make sense of this by thinking that if the investor bought it at a discount, part of the interest is increasing your investment (up to “THE FACE”-Gearty style) and vice versa for a premium. But thats just my intuition, so if somebody knows for sure, that'd be great.

Passed in 2014

FAR- (5/27) 88
REG- (2/20) 70, Rematch: (7/2)83
BEC- (4/2) 85
AUD- (4/24) 87

Using Becker live classes and online materials

"if you get confused, listen to the music play"

[accountabergs]

I was wondering the same thing about the prem/disc on the investor side. I'm inclined to think that you would record that, especially since (I think) recording interest revenue on the investor side includes either a reduction/addition to “Investment in Bonds”

Prem:

Dr. Cash

Cr. Investment in Bonds

Cr. Interest Revenue

Disc:

Dr. Cash

Dr. Investment in Bonds

Cr. Interest Revenue

I make sense of this by thinking that if the investor bought it at a discount, part of the interest is increasing your investment (up to “THE FACE”-Gearty style) and vice versa for a premium. But thats just my intuition, so if somebody knows for sure, that'd be great.

Passed in 2014

FAR- (5/27) 88
REG- (2/20) 70, Rematch: (7/2)83
BEC- (4/2) 85
AUD- (4/24) 87

Using Becker live classes and online materials

"if you get confused, listen to the music play"

[Anonymous]

I think you are correct, see:

https://accounting.utep.edu/sglandon/c12/c12a.pdf

Can someone confirm this?

[Anonymous]

I think you are correct, see:

https://accounting.utep.edu/sglandon/c12/c12a.pdf

Can someone confirm this?

[accountabergs]

Yeah, I think page 3 and 4 on that pdf are sufficient confirmation for us. Good find

Passed in 2014

FAR- (5/27) 88
REG- (2/20) 70, Rematch: (7/2)83
BEC- (4/2) 85
AUD- (4/24) 87

Using Becker live classes and online materials

"if you get confused, listen to the music play"

[accountabergs]

Yeah, I think page 3 and 4 on that pdf are sufficient confirmation for us. Good find

Passed in 2014

FAR- (5/27) 88
REG- (2/20) 70, Rematch: (7/2)83
BEC- (4/2) 85
AUD- (4/24) 87

Using Becker live classes and online materials

"if you get confused, listen to the music play"

[Author]

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