Valix Finacc vol 1 Problem 12-16

Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 12-16

1.  Journal entries

     a.  Held to maturity securities                                                       7,679,000

                Cash                                                                                                          7,679,000

     b.  Cash (10% x 8,000,000)                                                               800,000

                Interest income                                                                                           800,000

    c.   Held to maturity securities                                                         121,480

                Interest income                                                                                           121,480

           Interest income (7,679,000 x 12%)                                                                     921,480

           Interest received (8,000,000 x 10%)                                                                    800,000

           Discount amortization                                                                                     121,480

    d.   Cash                                                                                        2,000,000

                Held to maturity securities                                                                         2,000,000

2.  Cost                                                                                                                                  7,769,000

     Discount amortization                                                                                           121,480

     Annual installment                                                                                             (2,000,000)

     Book value – 12/31/2008                                                                                      5,800,480