Carpark Services began operations in 20X1 and maintains long-term investments in available-for-sale debt securities. The year-end cost and fair values for its portfolio of debt securities are as follows:- **December 31, 20X1**: Cost is $305,000, and Fair Value is $300,000.- **December 31, 20X2**: Cost is $384,000, and Fair Value is $390,000.The year-end adjusting entry required to record the unrealized gain or loss at December 31, 20X2 involves recognizing the difference between the fair value and the cost of these securities. ### Explanation:- In 20X1, there is an unrealized loss of $5,000 because the fair value ($300,000) is less than the cost ($305,000).- In 20X2, there is an unrealized gain of $6,000 because the fair value ($390,000) is greater than the cost ($384,000). The adjustment ensures financial statements reflect the current market value of investments, capturing unrealized gains or losses.

Companies must record revenue and costs when they are generated or incurred, rather than when cash…

Answered: Carpark Services began operati…

Carpark Services began operati available-for-sale debt securitie securities follows. The year-end December 31, 20X2 is: Available-for-Sale Securities Co

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: Entries for issuing and calling bonds; lossAdele Corp., a wholesaler of music equipment, issued…

A: Solution:- Preparation of journal entries as follows under:-

Q: 2. EX.11.150 Luke Corp. issued $2,000,000 of 20-year, 9% callable bonds on July 1, Year 1, with…

A: Bonds Payable: A bond is a debt instrument, and so it requires its issuing company to pay periodic…

Q: Trog Industries pays and records the semiannual interest on its $520,000, 10-year, 6% bonds…

A: Here in this question, we are required to make journal entry for interest payment and discount…

Q: Ticker Services began operations in Year 1 and holds long-term investments in available-for-sale…

A: The journal entry is used to record a business transaction in the accounting records. A business…

Q: Entity A has the following liabilities as of December 31, 2021. a. Trade accounts payable, net of…

A: Current Liabilities Current liabilities which is included in the liability section in the balance…

Q: Journal entry worksheet 1 Record the year-end adjusting entry for the securities portfolio. ote:…

A: The cash is being paid to the company shareholders . These are main be to the existing shareholder…

Q: At the end of the operating period, a rediscount of 7.500 TL has been calculated for the debt…

A: Basically it has various ways to define Debt Securities in terms of accounting.Debt Securities is a…

Q: Please help me

A: It has been given in the question that only the cash receipts journal is required to be made. This…

Q: Demopoulos Company acquired $145,800 of Marimar Co., 8% bonds on May 1 at their face amount.…

A: Introduction: Journals: Recording of a business transactions in a chronological order. First step in…

Q: Selected accounts from GermX Company's adjusted trial balance for the year ended December 31 follow.…

A: Workings :- 1) Calculation of carrying value of trading securities :- Trading securities (at cost) +…

Q: Reporting Long-Term Debt on the Balance Sheet Parky Corp. provides contracted home staging services…

A: As per fair valuation Bond is valued at fair market value as on Balance Sheet date.

Q: Bonds Payable Transactions Beaufort Vaults Corporation produces and sells burial vaults. On July 1,…

A: Bonds are instrument issued by company acknowledging the debt raised by company. It is a liability…

Q: On June 30, Jameson Company issued $2,500,000 of 10-year, 8% bonds, dated June 30, for $2,580,000.…

A: A BOND IS A DEBT SECURITY UNDER WHICH THE BOND ISSUER OWES THE BOND HOLDER A DEBT INCLUDING INTEREST…

Q: The adjusted trial balance for Perry Corporation at the end of 2018 contained the following…

A: Long-term liabilities are amount due after 12 months.

Q: HİLİ Corporation had the following bond issue: Date of issue/sale: May 1, 20-A Principal: $500,000…

A: As posted multiple sub parts we are answering only first three sub parts kindly repost the…

Q: The following information relates to the debt securities investments of Sheffield Company. 1. 2. 3.…

A: Answer:- Bonds:- It is debt product designed to raise capital and is also referred to as a fixed…

Q: Requirements- Journalize the following transactions for Zillow. Include an explanation for each…

A: solution : given face value of bond = $140,000 coupon rate =10% interest payable…

Q: kau.3 answer must be in table format or i will give down vote

A: The incorrect may be due to transaction b was not entered in transaction column…

Q: MC21. Bay Corporation trial balance included the following account balances at December 31, 2021:…

A: Lets understand the basics. Current liability means a liability which is expected to be settle…

Q: Requirements 1. Journalize the following transactions of Laporte Communications, Inc.: 2. At…

Q: Darien Inc. redeemed $20,000 of its bonds at 102 on January 1. At this date, the unamortized…

A: Cash on bonds is 20000 × 1.02 = 20400 the unamortized discount was $2,760. Loss on redemption is $…

Q: Debt Investment Transactions, Available-for-Sale Valuation Rekya Mart Inc. is a general merchandise…

A: Journal Entry:- These are prepared by the companies with debit and credit sides in order to match…

Q: epare the statement of financial position for 1,500 bonds with $1,000 face value, which the market…

Q: Q 7 - Khalid Corporation had the following transactions relating to debt investments: Jan. 1…

A: a) Date Particulars Debit Credit Jan 1 Investment in Bonds 50,000 Cash 50,000…

Q: The Square Foot Grill, Incorporated issued $240,000 of 10-year, 7 percent bonds on January 1, Year…

A: When the bonds are issued the book value may be different from the face value. If the bonds are…

Q: Mucho Dineros, Inc. purchased 100, $1,000, 9%, 10-year bonds on December 1, Year 1 for $100,000. The…

A: Bonds is a long-term debts issued by the government and companies to raise funds for their…

Q: am. 105.

A: The first step in journalizing the entry is to understand the transaction. Smiley Corporation issued…

Q: Exercise 15-7 (Algo) Multiyear fair value adjustments to available-for-sale debt securities LO P3…

A: Investment Fair value: It implies to an estimated amount or price at which both seller and buyer…

Q: On January 1, $904,000, 5-year, 10% bonds, were issued for $876,880. Interest is paid semiannually…

A: SOLUTION- Semiannual Amortization Amount= 904000 * 10% * 6/12= 45200

Q: A9 please use table.......

A: THANK YOU

Q: Entries for Bonds Payable, including bond redemption The following transactions were completed by…

A: Journalize the entries are as follows: Date Accounts title and explanation Debit $ Credit…

Q: Rekya Mart Inc. is a general merchandise retail company that began operations on January 1, Year 1.…

A: 1) Journal Entries…

Q: Classifying Bond Transactions- Direct Method Cambell Inc. issued $180,000, 6%, 10-year bonds on…

A: The cash payment of interest is a cash outflow in the operating activities. It will reduce the total…

Q: Prepare Natura Company's journal entries to record the following transactions involving its…

A: Journal entries are prepared by adhering to the guidelines of double-entry bookkeeping. Thus, every…

Q: Marketable Debt Securities Use the financial statement effects template to record the accounts and…

A: The objective of the question is to record the accounts and amounts for the four transactions…

Q: Required information [The following information applies to the questions displayed below.) Dunphy…

A: The accounting equation is a mathematical representation of financial transactions. The accounting…

Q: On January 1, 2021, Ayayai Ltd. paid $238,831.09 for 12% bonds of Variation Ltd. with a maturity…

A: As per the given information: Amount paid for 12% bonds- $ 238,831.09 Maturity value - $ 222,000…

Q: Issuance of Long-Term Debt Anne Corp. issued $366,000, 5% bonds. Required: Provide the necessary…

Q: payable semiannually on April 1 and October 1. Question Content Area a. Journalize the entry to…

A: Journal entries refer to the recording of the business activities into the books of accounts or into…

Q: nson Co. produces and distributes semiconductors for use by computer ufacturers. Thomson Co. issued…

A: A bond is an income instrument of the company, that shows the loan which has been made by the…

Q: Prepare Natura Company’s journal entries to record the following transactions involving its…

A: Short-term investments are financial assets that may readily be converted to cash, often within a…

Q: The following information is available for Tamarisk Corporation's available-for-sale debt securities…

Question

Carpark Services began operations in 20X1 and maintains long-term investments in available-for-sale debt securities. The year-end cost and fair values for its portfolio of debt securities are as follows:

- **December 31, 20X1**: Cost is $305,000, and Fair Value is $300,000.
- **December 31, 20X2**: Cost is $384,000, and Fair Value is $390,000.

The year-end adjusting entry required to record the unrealized gain or loss at December 31, 20X2 involves recognizing the difference between the fair value and the cost of these securities.

### Explanation:
- In 20X1, there is an unrealized loss of $5,000 because the fair value ($300,000) is less than the cost ($305,000).
- In 20X2, there is an unrealized gain of $6,000 because the fair value ($390,000) is greater than the cost ($384,000).

The adjustment ensures financial statements reflect the current market value of investments, capturing unrealized gains or losses.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1: Introduction

VIEW

Step 2: Working notes for the calculation of the journal entry

VIEW

Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

The following information is available for Tamarisk Corporation's available-for-sale debt securities at December 31, 2020. Security Cost Fair Value X $40,120 $35,400 Y 28,320 37,760 $68,440 $73,160 Prepare the adjusting entry to record the securities at fair value at December 31, 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. List debit entry before credit entry.) Account Titles and Explanation Debit Credit
Required information Skip to question [The following information applies to the questions displayed below.] Dunphy Company issued $50,000 of 7.0%, 10-year bonds at par value on January 1. Interest is paid semiannually each June 30 and December 31. Analyze transactions by showing their effects on the accounting equation—specifically, identify the accounts and amounts (including + or −) for each transaction.
Reporting Long-Term Debt on the Balance Sheet Scott Corp. provides contracted home staging services to real estate agencies and their clients. Scott issued the following bonds in the current year: Required: Hide a. Prepare the balance sheet for 1,500 bonds with $1,000 face value which the market has valued at $45,000 below its face value. Scott Corp. Balance Sheet (Partial) $ Bonds payable, net $ Hide b. Prepare the balance sheet for 2,700 bonds with $1,000 face value which the market has valued at $85,000 above its face value. Scott Corp. Balance Sheet (Partial) $ Bonds payable, net $
Please provide clear step by step answer with all working like explanation computation narrations in text form
On January 1, $853,000, 5-year, 10% bonds were issued for $827,410. Interest is paid semiannually on January 1 and July 1. If the issuing corporation uses the straight-line method to amortize a discount on bonds payable, the semiannual amortization amount is a. $42,650 Ob. $2,559 Oc. $25,590 d. $5,118 Woxt
of 2 ok nt nces ! Required information [The following information applies to the questions displayed below.] Dunphy Company issued $10,000 of 6%, 10-year bonds at par value on January 1. Interest is paid semiannually each June 30 and December 31. Analyze transactions by showing their effects on the accounting equation-specifically, identify the accounts and amounts (including + or -) for each transaction. Date January 1 June 30 Assets Liabilities
At December 31, 2020, the available-for-sale debt securities for Larkspur, Inc. are as follows. Security Cost Fair Value X $28,600 $24,960 Y 13,000 13,520 23,920 18,720 $65,520 $57,200 (a) Prepare the adjusting entry at December 31, 2020, to report the securities at fair value. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. List debit entry before credit entry.) Date Account Titles and Explanation Dec. 31 N
Majestic Corporation holds an investment in Cromwell bonds that pays interest eachOctober 31. Majestic’s balance sheet at December 31 should reporta. interest expense.b. interest revenue.c. interest payable.d. interest receivable.
On January 1, $853,000, 5-year, 10% bonds were issued for $827,410. Interest is paid semiannually on January 1 and July 1. If the issuing corporation uses the straight-line method to amortize a discount on bonds payable, the semiannual amortization amount is a. $42,650 O Ob. $2,559 Oc. $25,590 Od. $5,118
Do not give solution in image
Payable journal Entries; Straight - Line Interest Amortization and discount tamortization (staight ine interest method on June On December 31, Brown Company issued $450,000 of 20 -year, eight percent bonds payable for $377,784 yielding an effective interest rate of tem percent, interest is payable senttannually on June 30 and December 31. Prepare joumal entries to reflect (a) the issuance of the bonds, (b) the semiannual interest payment a 30, and (c) the semiannual interest payment and discount amortization on December 31.
On August 1, 2022, Bramble Corp. issued $482,400, 8%, 10-year bonds at face value. Interest is payable annually on August 1. Bramble’s year-end is December 31. Prepare the journal entry to record the issuance of the bonds. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Aug. 1 enter an account title to record the issuance of the bonds on August 1 enter a debit amount enter a credit amount enter an account title to record the issuance of the bonds on August 1 enter a debit amount enter a credit amount eTextbook and Media List of Accounts Prepare the journal entry to record the accrual of interest on December 31, 2022. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Dec. 31 enter an…