P 12-9 Securities held-to-maturity; trading securities and equity investments LO12-1, LO12-2, LO12-3,LO12-5Amalgamated General Corporation is a consulting firm that also offers financial services through its credit division. From time to time the companybuys and sells securities. The following selected transactions relate to Amalgamated's investment activities during the last quarter of 2024 and the firstmonth of 2025. The only securities held by Amalgamated at October 1, 2024 were $30 million of 10% bonds of Kansas Abstractors, Inc., purchased onMay 1, 2024 at face value and held in Amalgamated's trading securities portfolio. The company's fiscal year ends on December 31.2024Oct. 1831Nov. 11Dec. 120212329312025Jan. 7Purchased 2 million shares of Millwork Ventures Company common stock for $58 million. Millwork has a total of 30 million sharesissued.Received semiannual interest of $1.5 million from the Kansas Abstractors bonds.Purchased 10% bonds of Holistic Entertainment Enterprises at their $18 million face value, to beheld until they mature in 2034. Semiannual interest is payable April 30 and October 31.Sold the Kansas Abstractors bonds for $28 million because rising interest rates are expected to cause their fair value to continue to fall. Nounrealized gains and losses had been recorded on these bonds previously.Purchased 12% bonds of Household Plastics Corporation at their $60 million face value, to be held until they mature in 2034. Semiannualinterest is payable May 31 and November 30.Purchased U.S. Treasury bonds for $5.6 million as trading securities, hoping to earn profits on shortterm differences in prices.Purchased 4 million shares of NXS Corporation's 50 million shares of common stock for $44 million, planning to hold these shares untilmarket conditions encourage their sale.Sold the Treasury bonds for $5.7 million.Received cash dividends of $3 million from the Millwork Ventures Company shares of common stock.Recorded any necessary adjusting entries relating to the investments. The market price of the Millwork Ventures Company common stockwas $27.50 per share and $11.50 per share for the NXS Corporation common stock. The fair values of the bond investments were $58.7million for Household Plastics Corporation and $16.7 million for Holistic Entertainment Enterprises.Sold the NXS Corporation common stock shares for $43.3 million.Required:Prepare the appropriate journal entry for each transaction or event. Use one summary entry on December 31 to adjust the portfolio of equityinvestments to fair value.

Investment means an asset purchased in expectation of earning a return on such investment in future…

Answered: Amalgamated General Corporation is a…

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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The following transactions relate to bond investments of Livermore Laboratories. The company's fiscal year ends on December 31. Livermore uses the straight-line method to determine interest. 2024 July 1 Purchased $23 million of Bracecourt Corporation 12% debentures, due in 20 years (June 30, 2044), for $22.7 million. Interest is payable on January 1 and July 1 of each year. October 1 Purchased $37 million of 15% Framm Pharmaceuticals debentures, due May 31, 2034, for $38,972,000 plus accrued interest. Interest is payable on June 1 and December 1 of each year. December 1 Received interest on the Framm bonds. December 31 Accrued interest. 2025 January 1 Received interest on the Bracecourt bonds. June 1 Received interest on the Framm bonds. July 1 Received interest on the Bracecourt bonds. September 1 Sold $18.5 million of the Framm bonds at 103 plus accrued interest. December 1 Received interest on the remaining Framm bonds. December 31 Accrued interest. 2026 January 1 Received interest…
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Amalgamated General Corporation is a consulting firm that also offers financial services through its credit division. From time to time the company buys and sells securities. The following selected transactions relate to Amalgamated's investment activities during the last quarter of 2024 and the first month of 2025. The only securities held by Amalgamated at October 1, 2024 were $30 million of 10% bonds of Kansas Abstractors, Incorporated purchased on May 1, 2024 at face value and held in Amalgamated's trading securities portfolio. The company's fiscal year ends on December 31. October 18, 2024 Purchased 2 million shares of Millwork Ventures Company common stock for $58 million. Millwork has a total of 30 million shares issued. October 31, 2024 November 1, 2024 November 1, 2024 Received semiannual interest of $1.5 million from the Kansas Abstractors bonds. Purchased 10% bonds of Holistic Entertainment Enterprises at their $18 million face value, to be held until they mature in 2034.…
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