At the beginning of 2019, Ace Company had the following portfolio of investments in available-for-sale debt securities (all of which were acquired at par value): Security Cost Fair Value (1/1/2019) A $20,000 $24,000 B $30,000 $31,500 Totals $50,000 $55,500 During 2019, the following transactions occurred: May 3 Purchased C debt securities at their par value for $50,000. July 1 Sold all of the A securities for $24,000 plus interest of $1,500. Dec. 31 Received interest of $7,600 on the B and C securities. Additionally the following information was available: Security Fair Value (12/31/2019) B $31,250 C $52,500 Question Journal entries for 2019 would include: Debit to Interest Income of $7,600 Debit to Fair Value Adjustment - AFS of $4,000 Credit to Unrealized Holding Gains/Losses - OCI of $2,250 Debit to Bond Investments - AFS of $20,000
At the beginning of 2019, Ace Company had the following portfolio of investments in available-for-sale debt securities (all of which were acquired at par value):
Security Cost Fair Value (1/1/2019)
A $20,000 $24,000
B $30,000 $31,500
Totals $50,000 $55,500
During 2019, the following transactions occurred:
|
May |
3 |
Purchased C debt securities at their par value for $50,000. |
|
July |
1 |
Sold all of the A securities for $24,000 plus interest of $1,500. |
|
Dec. |
31 |
Received interest of $7,600 on the B and C securities. Additionally the following information was available: |
Security Fair Value (12/31/2019)
B $31,250
C $52,500
Question
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Debit to Interest Income of $7,600 |
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Debit to Fair Value Adjustment - AFS of $4,000 |
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Credit to Unrealized Holding Gains/Losses - OCI of $2,250 |
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Debit to Bond Investments - AFS of $20,000 |
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