afety Development Corporation had relatively large idle cash balances and in

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Safety Development Corporation had relatively large idle cash balances and invested them as follows in securities to be held as non-
strategic investments:
2023
Feb. 7 Purchased 4,100 common
shares of Royal Bank at $28.40, plus $500 in transaction fees.
19 Purchased 3,100 common shares of Imperial Oil at $56.50, and paid $250 in transaction fees.
Apr 1 Paid $107,037 plus $500 in transaction fees for a 8.20%, four-year, $109,000 Minco Inc. bond that pays interest quarterly
beginning June 30. The market rate of interest on this date was 8.60%. Sellers Corporation plans to hold this investment.
for the duration of the bond's contract life.
May 26 Purchased 3,900 common shares of BCE at $15.28, plus $200 in transaction fees.
June 1 Received a $0.25 per share cash dividend on the Royal Bank common shares.
17 Sold 3,100 Royal Bank common shares at $28.90.
30 Received interest on the Minco Inc. bond.
Aug
5 Received a $0.50 per share cash dividend on the Imperial Oil common shares
Sept 1 Received a $0.275 per share cash dividend on the remaining Royal Bank common shares.
30 Received interest on the Minco Inc. bond.
Dec 31 Received interest on the Minco Inc. bond.
On December 31, 2023, the fair values of the investments held by Safety Development Corporation were: Royal Bank, $29.40; Imperial.
Oil. $54.88; and BCE, $15.40. Assume the fair value and carrying value of the Minco Inc. bond were equal.
Show Transcribed Text
Apr. 1/23
June 30/23
Sept. 30/23
Dec. 31/23
Required:
1. Prepare an amortization schedule for the Minco Inc. bond showing only 2023. (Round your intermediate and final answers to the
nearest whole dollar amount. Enter all the amounts as positive values.)
Show Transcribed Text
View transaction list
<
Journal entry worksheet
Cash
Interest
Received
2
Date
Feb 07, 2023
Record entry
3
Record the purchase of investment.
Note: Enter debits before credits.
Period Interest
Income
2. Prepare journal entries to record the investment activity including the appropriate fair value adjustment on December 31. (Round
your intermediate and final answers to the nearest whole dollar amount.)
4 5 6
General Journal
3
Clear entry
7
Discount
Amort.
3
8 .....
c
Debit
Unamortized
Discount
12
c
I
Credit
intermediate and final answers to the
View general Journal
>
Carrying Value
Transcribed Image Text:Safety Development Corporation had relatively large idle cash balances and invested them as follows in securities to be held as non- strategic investments: 2023 Feb. 7 Purchased 4,100 common shares of Royal Bank at $28.40, plus $500 in transaction fees. 19 Purchased 3,100 common shares of Imperial Oil at $56.50, and paid $250 in transaction fees. Apr 1 Paid $107,037 plus $500 in transaction fees for a 8.20%, four-year, $109,000 Minco Inc. bond that pays interest quarterly beginning June 30. The market rate of interest on this date was 8.60%. Sellers Corporation plans to hold this investment. for the duration of the bond's contract life. May 26 Purchased 3,900 common shares of BCE at $15.28, plus $200 in transaction fees. June 1 Received a $0.25 per share cash dividend on the Royal Bank common shares. 17 Sold 3,100 Royal Bank common shares at $28.90. 30 Received interest on the Minco Inc. bond. Aug 5 Received a $0.50 per share cash dividend on the Imperial Oil common shares Sept 1 Received a $0.275 per share cash dividend on the remaining Royal Bank common shares. 30 Received interest on the Minco Inc. bond. Dec 31 Received interest on the Minco Inc. bond. On December 31, 2023, the fair values of the investments held by Safety Development Corporation were: Royal Bank, $29.40; Imperial. Oil. $54.88; and BCE, $15.40. Assume the fair value and carrying value of the Minco Inc. bond were equal. Show Transcribed Text Apr. 1/23 June 30/23 Sept. 30/23 Dec. 31/23 Required: 1. Prepare an amortization schedule for the Minco Inc. bond showing only 2023. (Round your intermediate and final answers to the nearest whole dollar amount. Enter all the amounts as positive values.) Show Transcribed Text View transaction list < Journal entry worksheet Cash Interest Received 2 Date Feb 07, 2023 Record entry 3 Record the purchase of investment. Note: Enter debits before credits. Period Interest Income 2. Prepare journal entries to record the investment activity including the appropriate fair value adjustment on December 31. (Round your intermediate and final answers to the nearest whole dollar amount.) 4 5 6 General Journal 3 Clear entry 7 Discount Amort. 3 8 ..... c Debit Unamortized Discount 12 c I Credit intermediate and final answers to the View general Journal > Carrying Value
3. Show how the investments will be reported on the December 31, 2023, balance sheet. (Round your intermediate and final answers
to the nearest whole dollar amount.)
Assets
SAFETY DEVELOPMENT CORPORATION
Partial Balance Sheet
December 31, 2023
Current Investments:
Non-current investments:
Show Transcribed Text
c
Analysis Component:
If the fair value adjustment is not recorded by Safety Development Corporation, what is the impact on the financial statements?
Show Transcribed Text
Transcribed Image Text:3. Show how the investments will be reported on the December 31, 2023, balance sheet. (Round your intermediate and final answers to the nearest whole dollar amount.) Assets SAFETY DEVELOPMENT CORPORATION Partial Balance Sheet December 31, 2023 Current Investments: Non-current investments: Show Transcribed Text c Analysis Component: If the fair value adjustment is not recorded by Safety Development Corporation, what is the impact on the financial statements? Show Transcribed Text
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