Answered: Compute for the gain or loss on selling…

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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Question

Lancaster Company carried out the following transactions in bond investments held for trading during the current year.

March 1

Purchased 1,000, P1,000, 12% bonds of Jerald Company at 90 plus accrued interest. The bonds pay interest semiannually on July 1 and December 31.

March 31

Purchased 3,000, P1,000, 12% bonds of Jason Company at 105 plus accrued interest. Semiannual payment of interest is February 28 and August 31.

November 30

Sold 1,000 of the Jason Company at 110 plus accrued interest.

December 31

The following quotations were obtained:

Jerald Company 101

Jason Company 95

Required:

Compute for the gain or loss on selling Jason Company bonds.
Compute for the ending balance of the investment in bonds held for training.
Compute for the unrealized gain or loss.
Explain where to present the unrealized gains or loss and gain or loss from selling the bond investment held for trading.

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