Kirkland Company had no trading debt securities prior to this year. It had the following transactions this year involving trading debt securities. August 2 Purchased Verizon bonds for $28,000. September 7 Purchased Apple bonds for $53,000. September 12 Purchased Mastercard bonds for $38,000. October 21 Sold some of its Verizon bonds that had cost $2,900 for $3,000 cash. October 23 Sold some of its Apple bonds that had cost $33,000 for $33,400 cash. November 1 Purchased Walmart bonds for $58,000. December 10 Sold all of its Mastercard bonds for $36,000 cash. Required: 1. Prepare journal entries to record these transactions. 2. Prepare a table to compare the year-end cost and fair values of its trading debt securities. Year-end fair values: Verizon, $26,500; Apple, $31,000; and Walmart, $48,000. 3. Prepare the adjusting entry to record the year-end fair value adjustment for the portfolio of trading debt securities.
Kirkland Company had no trading debt securities prior to this year. It had the following transactions this year involving trading debt securities. August 2 Purchased Verizon bonds for $28,000. September 7 Purchased Apple bonds for $53,000. September 12 Purchased Mastercard bonds for $38,000. October 21 Sold some of its Verizon bonds that had cost $2,900 for $3,000 cash. October 23 Sold some of its Apple bonds that had cost $33,000 for $33,400 cash. November 1 Purchased Walmart bonds for $58,000. December 10 Sold all of its Mastercard bonds for $36,000 cash. Required: 1. Prepare journal entries to record these transactions. 2. Prepare a table to compare the year-end cost and fair values of its trading debt securities. Year-end fair values: Verizon, $26,500; Apple, $31,000; and Walmart, $48,000. 3. Prepare the adjusting entry to record the year-end fair value adjustment for the portfolio of trading debt securities.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Kirkland Company had no trading debt securities prior to this year. It had the following transactions this year involving trading debt
securities.
August 2 Purchased Verizon bonds for $28,000.
September 7 Purchased Apple bonds for $53,000.
September 12 Purchased Mastercard bonds for $38,000.
October 21 Sold some of its Verizon bonds that had cost $2,900 for $3,000 cash.
October 23 Sold some of its Apple bonds that had cost $33,000 for $33,400 cash.
November 1 Purchased Walmart bonds for $58,000.
December 10 Sold all of its Mastercard bonds for $36,000 cash.
Required:
1. Prepare journal entries to record these transactions.
2. Prepare a table to compare the year-end cost and fair values of its trading debt securities. Year-end fair values: Verizon,
$26,500; Apple, $31,000; and Walmart, $48,000.
3. Prepare the adjusting entry to record the year-end fair value adjustment for the portfolio of trading debt securities.
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