Comprehensive Problem 4 (Part A)InstructionsChart of AccountsJournalInstructionsRecord on journal page 11:Oct.1Purchased $90,000 of Dream Inc. 10-year, 5% bonds, directly from the issuing company, at their faceamount plus accrued interest of $375. The bonds are a held-to-maturity investment.Sold, at $38 per share, 2,600 shares of treasury common stock purchased on Jun. 8.14Received interest of $6,000 from the Solstice Corp. investment on Jun. 1.29Sold Solstice Corp. bonds with a face value of $40,020 for $45,000, realizing a gain of $4,980.31Recorded the payment of semiannual interest on the bonds issued on May 1 and the amortization ofthe premium for 6 months. The amortization is determined using the straight-line method.Dec.31Accrued interest for 3 months on the Dream Inc. bonds purchased on Oct. 1.31Pinkberry Co. reported total earnings of $240,000. Equinox Products recorded its share of PinkberryCo. net income using the equity method.31The Solstice Corp. bonds have a fair value of $253,630 on December 31, 20Y5. Valuation Allowancefor Available-for-Sale Investments had a balance of zero on January 1, 20Y5.Required:

Journal entries are those transactions which are recorded in the books of entity and it is the…

1 Purchased $90,000 of Dream Inc. 10-year, 5% bonds, directly from the issuing company, a amount plus accrued interest of $375. The bonds are a held-to-maturity investment. 7 Sold, at $38 per share, 2,600 shares of treasury common stock purchased on Jun. 8. 4 Received interest of $6,000 from the Solstice Corp. investment on Jun. 1.

1 Purchased $90,000 of Dream Inc. 10-year, 5% bonds, directly from the issuing company, a amount plus accrued interest of $375. The bonds are a held-to-maturity investment. 7 Sold, at $38 per share, 2,600 shares of treasury common stock purchased on Jun. 8. 4 Received interest of $6,000 from the Solstice Corp. investment on Jun. 1.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Interest for bond (held-to-maturity) investments On February 1, Hansen Company purchased $84,000 of 5%, 10-year Knight Company bonds at their face amount plus 1 month's accrued interest. The bonds pay interest on January 1 and July 1. On October 1, Hansen Company sold $30,000 of the Knight Company bonds acquired on February 1, plus 3 months' accrued interest. On December 31, 3 months' interest was accrued for the remaining bonds. Determine the interest earned by Hansen Company on Knight Company bonds for the year.
I. Metro Company purchased $500,000, 10%, 5-year bonds on January 1, 20x1, with interest payable on July 1 and January 1. The market interest rate (yield) was 8% for bonds of similar risk and maturity. The market value on December 31, 20x1 was $555,000 and all bonds were sold for $507,500 on January 1, 20x2 after the second payment. Required: compute the bond price on January 1, 20x1, prepare the amortization schedule and record journal entries on January 1, 20x1, July 1, 20x1, December 31, 20x1 and January 1, 20x2 assuming the bond investment is classified as available-for-sale security.
Selected debt investment transactions for Easy A Inc., a retail business, are listed below. Easy A Inc. has a fiscal year ending on December 31. Year 1: Feb. 1 May 1 Jun. 1 Sept. 1 Oct. 1 Dec. 1 Dec. 31 Year 2: Mar. 1 Jun. 1 Sept. 1 Bought $35,000 of 6%, XYZ Co. 12-year bonds at their face amount plus accrued interest of $700. The bonds pay interest semiannually on June 1 and December 1. Bought $200,000 of Simple Tree 5%, 20-year bonds at their face amount plus accrued interest of $2,500. The bonds pay interest semiannually on March 1 and September 1. Received semiannual interest on the XYZ Co. bonds. Received semiannual interest on the Simple Tree bonds. Sold $15,000 of Simple Tree bonds at 102% plus accrued interest of $63. Received semiannual interest on the XYZ Co. bonds. Accrued $3,135 interest on the Simple Tree bonds. Accrued $175 interest on the XYZ Co. bonds. Received semiannual interest on the Simple Tree bonds. Received semiannual interest on the XYZ Co. bonds. Received…
On July 1, 20x3, Wenna Inc. purchased as a short-term investment a P 1,000,000 face value Keizen Co. 8% bond for P 910,000 plus accrued interest to yield 10%. The bonds mature on January 1, 20x10, pay interest annually on January 1, and are classified as Debt Investments @ Fair Value through Profit or Loss. On December 31, 20x3, the bonds had a fair value of P 945,000. On February 13, 20x4, Wenna sold the bonds for P 920,000. On July 1, 20x3, how much cash was paid by Wenna Inc. in connection with the purchase of the Debt Investments?
Corp, purchased five $1,000 8% bonds of Circuit Corporation when the market rate of interest was 6%. Interest is paid semiannually, and the bonds will in five years. Barnwell mature Using the PV function in Excel, compute the price Barnwell paid (the present value) for the bond investment. (Assume that all payments of interest and principal occur at the end of the period. Round your answer to the nearest cent.) Barnwell paid on the bond investment.
On January 2, 20X2. Topsail purchased 50, $1,000 bonds issued by Charlie Company. The bonds pay interest on December 31, at 6% and mature in three years. The bonds were purchased for $47,423 to yield a return of 8%. Topsail's management has the intent to hold the bonds for two years. On December 31, 20X2, the bonds have a fair value of $49,100. On February 1, 20X3, Topsail sold half of the bonds for $24,900. Required: provide the journal entries necessary to record Topsail's investment in Charlie Company's bonds from January 2, 20X2 to February 1, 20X3. Your entry to record the sale on February 1, 20X3 should include a reciassification adjustment. Provide supporting calculations
Suspect Company Issued $1,170,000 of 8 percent first mortgage bonds on January 1, 20X1, at 104. The bonds mature in 20 years and pay Interest semiannually on January 1 and July 1. Prime Corporation purchased $780,000 of Suspect's bonds from the original purchaser on December 31, 20X5, for $774,000. Prime owns 70 percent of Suspect's voting common stock. Required: a. Prepare the worksheet consolidation entry or entries needed to remove the effects of the Intercorporate bond ownership In preparing consolidated financial statements for 20X5. b. Prepare the worksheet consolidation entry or entries needed to remove the effects of the Intercorporate bond ownership In preparing consolidated financial statements for 20X6 Answer is not complete. Complete this question by entering your answers in the tabs below. Required A Required B Prepare the worksheet consolidation entry or entries needed to remove the effects of the intercorporate bond ownership in preparing consolidated financial…
Journalize the entries to record the following selected transactions of Oliver Co: a. purchased $100,000 of Kruse Co. 8% bonds at par value plus accrued interest of $2,000 b. Received first semiannual interest plus accrued interest of $1,500
Parilo Company acquired $183,600 of Makofske Company, 6% bonds on May 1, 20Y5, at their face amount. Interest is paid semiannually on May 1 and November 1. On November 1, 20Y5, Parilo sold $52,200 of the bonds for 96. Journalize the entries to record the following under the cost method:
Eddie Industries issues $829,000 of 8% bonds at 105. The amount of cash received from the sale is a.$804,130 b.$829,000 c.$895,320 d.$870,450
Hermosa Vista Company issued $180,000 5-year, 6.00% bonds and received $183,843 in cash. The market rate of interest when the bonds were issued was 5.50%. What is the amount of interest expense to be recorded for the first annual interest period if the company uses simplified effective-interest amortization? Multiple Choice $9,900.00 $10,111.37 $10,800.00 $11,030.58
Interest for bond (held-to-maturity) investments On February 1, Hansen Company purchased $108,000 of 5%, 15-year Knight Company bonds at their face amount plus 1 month's accrued interest. The bonds pay interest on January 1 and July 1. On October 1, Hansen Company sold $38,400 of the Knight Company bonds acquired on February 1, plus 3 months' accrued interest. On December 31, 3 months' interest was accrued for the remaining bonds. Determine the interest earned by Hansen Company on Knight Company bonds for the year. 2$