AccountingBrooks Company purchases debt investments as trading securities at a cost of$66,000 on December 27. This is its first and only purchase of such securities.At December 31, these securities had a fair value of $72,000.Brooks sells a portion of its trading securities (costing $3,000) for $4,000 cash.Analyze each transaction above by showing its effects on the accountingequation-specifically, identify the accounts and amounts (including + or -) foreach transaction. Fill in the blanks1.1.AssetsDebt(+)Investments increase- TradingCash2. Gain onsale of debtinvestments3. DebtInvestments- Trading3. Cash(-)decrease(+)increase(-)decrease(+)increaseLiabilities + Equity66,000 =66,000 =6,0003,0004,000===+++++(+)increaseF6,000

Trading securities or securities held fir sale means the securities which are intends to sale within…

Answered: Accounting Brooks Company purchases…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Bucks' Corporation purchases debt investments as trading securities at acost of $150,000on December .1 This si its first and only purchase of such securities. On January 5, Buck's Corporation decidesot sel aportion foits trading securities ( costing $18,000) for $20,000 cash. Prepare the journal entry ot record the January 5sale:
Kirkland Company had no trading debt securities prior to this year. It had the following transactions this year involving trading debt securities. Aug. 2 Purchased Verizon bonds for $10,000. Sep. 7 Purchased Apple bonds for $35,000. 12 Purchased Mastercard bonds for $20,000. Oct. 21 Sold some of its Verizon bonds that had cost $2,000 for $2,100 cash. 23 Sold some of its Apple bonds that had cost $15,000 for $15,400 cash. Nov. 1 Purchased Walmart bonds for $40,000. Dec. 10 Sold all of its Mastercard bonds for $18,000 cash. Required 1. Prepare journal entries to record these transactions. 2. Prepare a table to compare the year-end cost and fair values of its trading debt securities. Year-end fair values: Verizon, $8,500; Apple, $22,000; and Walmart, $39,000. 3. Prepare the adjusting entry to record the year-end fair value adjustment for the portfolio of trading debt securities.
Kirkland Company had no trading debt securities prior to this year. It had the following transactions this year involving trading debt securities. August 2 Purchased Verizon bonds for $50,000. September 7 Purchased Apple bonds for $75,000. September 12 Purchased Mastercard bonds for $60,000. October 21 Sold some of its Verizon bonds that had cost $4,000 for $4,100 cash. October 23 Sold some of its Apple bonds that had cost $55,000 for $55,400 cash. November 1 Purchased Walmart bonds for $80,000. December 10 Sold all of its Mastercard bonds for $58,000 cash. Required 1. Prepare journal entries to record these transactions. 2. Prepare a table to compare the year-end cost and fair values of its trading debt securities. Year-end fair values: Verizon, $48,500; Apple, $42,000; and Walmart, $59,000. 3. Prepare the adjusting entry to record the year-end fair value adjustment for the portfolio of trading debt securities. Complete this question by entering your answer Required 1 Required 2…
1.Prepare Hertog Company’s journal entries to record the following transactions for the current year. May 7 Purchases Kraft bonds as a short-term investment in trading securities at a cost of $10,830. June 6 Sells its entire investment in Kraft bonds for $11,330 cash
Doyle Company issued $500,000 of 10-year, 7 percent bonds on January 1, Year 1. The bonds were issued at face value. Interest is payable in cash on December 31 of each year. Doyle immediately invested the proceeds from the bond issue in land. The land was leased for an annual $125,000 of cash revenue, which was collected on December 31 of each year, beginning December 31, Year 1. Organize the transaction data in accounts under the accounting equation for Year 1 and Year 2. (Enter any decreases to account balances with a minus sign. If there is no effect on the Account Titles for Retained Earnings, leave the cell blank. Not all cells will require entry.)
Kirkland Company had no trading debt securities prior to this year. It had the following transactions this year involving trading debt securities. August 2 Purchased Verizon bonds for $50,000. September 7 Purchased Apple bonds for $75,000. September 12 Purchased Mastercard bonds for $60,000. October 21 Sold some of its Verizon bonds that had cost $4,000 for $4,100 cash. October 23 Sold some of its Apple bonds that had cost $55,000 for $55,400 cash. November 1 Purchased Walmart bonds for $80,000. December 10 Sold all of its Mastercard bonds for $58,000 cash. Required 1. Prepare journal entries to record these transactions. 2. Prepare a table to compare the year-end cost and fair values of its trading debt securities. Year-end fair values: Verizon, $48,500; Apple, $42,000; and Walmart, $59,000. 3. Prepare the adjusting entry to record the year-end fair value adjustment for the portfolio of trading debt securities. Complete this question by entering your ans below. Required 1 Required 2…
Pharoah Corporation purchased trading investment bonds for $60,000 at par. At December 31, Pharoah received annual interest of $2,400, and the fair value of the bonds was $57,400. Prepare Pharoah' journal entries for (a) the purchase of the investment, (b) the interest received, and (c) the fair value adjustment. (Assume a zero balance in the Fair Value Adjustment account.) (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) No. Account Titles and Explanation (a) (b) (c) Debit Credit
Berkshire Co. purchases debt investments in trading securities at a cost of $130 on July 1. (This is its first and only purchase of trading securities.) On December 30, Berkshire received $1 of interest from its trading securities. At year-end December 31, the trading securities had a fair value of $140.
The following information relates to the debt securities investments of Wildcat Company. 1. On February 1, the company purchased 10% bonds of Gibbons Co. having a par value of $300,000 at 100 plus accrued interest. Interest is payable April 1 and October 1. 2. On April 1, semiannual interest is received. 3. On July 1, 9% bonds of Sampson, Inc. were purchased. These bonds with a par value of $200,000 were purchased at 100 plus accrued interest. Interest dates are June 1 and December 1. 4. On September 1, bonds with a par value of $60,000, purchased on February 1, are sold at 99 plus accrued interest. 5. On October 1, semiannual interest is received. 6. On December 1, semiannual interest is received. 7. On December 31, the fair value of the bonds purchased February 1 and July 1 are 95 and 93, respectively. Instructions a. Prepare any journal entries you consider necessary, including year-end entries (December 31), assuming these are available-for-sale securities. b. If…
Prepare Krum Company's journal entries to record the following transactions involving its short-term investments in available-for-sale debt securities, all of which occurred during the current year. a. On August 1, paid $62,000 cash to purchase Houtte's 11%, six-month debt securities ($62,000 principal), dated August 1. b. On October 30, received a check from Houtte for 90 days' interest on the debt securities in transaction a. (Use 360 days in a year. Do not round your intermediate calculations.) View transaction list Journal entry worksheet 1 On August 1, paid $62,000 cash to purchase Houtte's 11% six-month debt securities ($62,000 principal), dated August 1. 2 Note: Enter debits before credits. Transaction a. Record entry General Journal Clear entry Debit Credit View general journal
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Mead Incorporated began operations in Year 1. Following is a series of transactions and events involving its long-term debt investments in available-for-sale securities. Year 1 January 20 Purchased Johnson & Johnson bonds for $20,500. February 9 Purchased Sony notes for $55,440. June 12 Purchased Mattel bonds for $40,500. December 31 Fair values for debt in the portfolio are Johnson & Johnson, $21,500; Sony, $52,500; and Mattel, $46,350. Year 2 Sold all of the Johnson & Johnson bonds for $23,500. Sold all of the Mattel bonds for $35,850. April 15 July 5 July 22 August 19 Purchased Sara Lee notes for $13,500. Purchased Kodak bonds for $15,300. December 31 Fair values for debt in the portfolio are Kodak, $17,325; Sara Lee, $12,000; and Sony, $60,000. Year 3 February 27 Purchased Microsoft bonds for $160,800. June 21 Sold all of the Sony notes for $57,600. June 30 Purchased Black & Decker bonds for $50,400. August 3 Sold all of the Sara Lee notes for $9,750. November 1 Sold all of the…

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