Directions: Review the Jamona Corporation information.
Prepare journal entries that relate to the balance sheet items attached with appropriate backup lead schedules for investments, inventory, fixed assets, and capital leases. Prepare appropriate note disclosures.
University of Phoenix Material
On January 1, 2006, Jamona Corp. purchased 12% bonds, having a maturity value of $300,000, for $322,744.44. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2006, and mature January 1, 2011, with interest receivable December 31 of each year. The company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified as available-for-sale. The fair value of the bonds at December 31 of each year is as follows:
o 2006 - $320,500
o 2007 - $309,000
o 2008 - $308,000
o 2009 - $310,000
o 2010 - ...
Solution explains the journal entries.