The U.S. government will pay Bringle $2,500,000 each six months, equal to 2.5% of the $100 million face amount of the treasury bonds (5% annual coupon rate, paid in two installments each year), and will repay the $100 million at the end of five years. At the time Bringle purchases the bonds, the market prices these bonds to yield Bringle 6% annually (3% each six months). The bonds are classified
as held to maturity. Bringle will record the following entry.
a. Marketable Securities..............................95,734,898
Cash..........................................................................95,734,898
b. Marketable Securities............................100,000,000
Cash........................................................................100,000,000
c. Cash........................................................ 95,734,898
Marketable Securities...............................................95,734,898
d. Cash.................................................... 100,000,000
Marketable Securities...............................................95,734,898
e. Cash.......................................................105,907,059
Marketable Securities ............................................105,907,059
A
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