InstructionsChart of AccountsOn February 1, 2020, Aggie Corporation sold its investment in Smith Corporation bonds for $12,500. The bonds have a faceCHART OF ACCOUNTSvalue of $12,000 and a stated interest rate of 10%. The market value of the bonds on December 31, 2019 was $12,300.Aggie CorporationRequired:General LedgerPrepare the journal entries to record the sale of the bonds and the adjustments of the unrealized gain or loss.ASSETSREVENUE111 Cash411 Sales Revenue113 Investment in Trading Securities431 Interest Income114 Investment in Available-for-Sale Securities441 Gain on Sale of Available-for-SaleGeneral Journal117 Interest ReceivableSecurities119 Allowance for Change in Fair Value of Investment121 Accounts ReceivableEXPENSESPrepare the journal entries to record the sale of the bonds and the adjustments of the unrealized gain or loss on February 1, 2020.500 Cost of Goods Sold141 Inventory152 Prepaid Insurance511 Insurance ExpenseGeneral Journal Instructions181 Equipment512 Utilities Expense189 Accumulated Depreciation521 Salaries Expense191 Investment in Held-to-Maturity Debt Securities532 Bad Debt ExpensePAGE 1540 Interest ExpenseGENERAL JOURNALLIABILITIES541 Depreciation ExpenseDATEACCOUNT TITLEPOST. REF.DEBITCREDIT211 Accounts Payable559 Miscellaneous ExpensesFeb. 1Cash12,500.00231 Salaries Payable910 Income Tax ExpenseAccounts Payable12,500.002250 Unearned RevenueGain on Sale of Available-for-Sale Securities200.00261 Income Taxes PayableFeb. 1 Unrealized Holding Gain/Loss: Available-for-Sale Securities300.0045300.00EQUITY311 Common Stock331 Retained Earnings339 Unrealized Holding Gain/Loss: Available-for-SaleSecurities

Instructions On February 1, 2020, Aggie Corporation sold its investment in Smith Corporation bonds for $12,500. The bonds have a face value of $12.000 and a stated interest rate of 10%. The market value of the bonds on December 31, 2019 was $12.300. Required: Prepare the journal entries to record the sale of the bonds and the adjustments of the unrealized gain or loss.

Instructions On February 1, 2020, Aggie Corporation sold its investment in Smith Corporation bonds for $12,500. The bonds have a face value of $12.000 and a stated interest rate of 10%. The market value of the bonds on December 31, 2019 was $12.300. Required: Prepare the journal entries to record the sale of the bonds and the adjustments of the unrealized gain or loss.

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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Oso Company purchased a Costco bond for $40,000 on January 1, 2020 at face value with an interest rate of 3% paid and recorded annually on 12/31. Oso Company treats the bond as an available-for-sale investment. 1. On 12/31/20, Oso Company records ALL the entries related to this investment. The fair value of the bond is $45,000. Assume no entries have been recorded to date after the 1/1/20 purchase. Answer the following questions for Oso: a. How much is the investment valued at on Oso's balance sheet? Why is it valued at this amount? b. How much does Oso's net income change by for all entries recorded on 12/31/20 related to this bond? Include the amount and direction. If no change, write no change. 2. On 12/31/21, Oso Company records ALL the entries related to this investment. The fair value of the bond is $42,000. Assume no entries have been recorded since 12/31/20. Answer the following questions for Oso: a. Record the journal entry for any fair value adjustments that are needed. If no…