**Marketable Debt Securities** Use the financial statement effects template to record the accounts and amounts for the following four transactions involving investments in marketable debt securities classified as available-for-sale securities. a. Lourder Inc. purchases 10,000 bonds with a face value of $1,000 per bond. The bonds are purchased at par for cash and pay interest at a semi-annual rate of 4%. b. Lourder receives semi-annual cash interest of $200,000. c. Year-end fair value of the bonds is $978 per bond. d. Shortly after year-end, Lourder sells all 10,000 bonds for $970 per bond. Use negative signs with answers, if appropriate. **Table Explanation:** The table is divided into two main sections: Balance Sheet and Income Statement. **Balance Sheet:** - **Cash Asset**: Represents the cash transactions. - **Noncash Assets**: Represents the non-cash transactions. - **Liabilities**: Represents the company's liabilities. - **Contributed Capital**: Equity contributed by shareholders. - **Earned Capital**: Accumulated profits retained in the business. **Income Statement:** - **Revenues**: Income generated before expenses. - **Expenses**: Costs incurred by the business. - **Net Income**: Profit after expenses. **Transactions to Record:** - **Lourder purchases bonds**: Involves cash payment and bond acquisition. - **Lourder receives cash interest**: Involves cash inflow from interest. - **Bonds year-end fair value is determined**: Affects noncash assets and potentially other financial statement items. - **Lourder sells all bonds**: Involves cash inflow from bond sale, adjustment of assets, and reflection of any gain/loss. Record each transaction accordingly in the table, updating the relevant accounts and ensuring to include any changes in value, gains, or losses as required. Use negative values to indicate decreases in assets or income, as appropriate.
**Marketable Debt Securities** Use the financial statement effects template to record the accounts and amounts for the following four transactions involving investments in marketable debt securities classified as available-for-sale securities. a. Lourder Inc. purchases 10,000 bonds with a face value of $1,000 per bond. The bonds are purchased at par for cash and pay interest at a semi-annual rate of 4%. b. Lourder receives semi-annual cash interest of $200,000. c. Year-end fair value of the bonds is $978 per bond. d. Shortly after year-end, Lourder sells all 10,000 bonds for $970 per bond. Use negative signs with answers, if appropriate. **Table Explanation:** The table is divided into two main sections: Balance Sheet and Income Statement. **Balance Sheet:** - **Cash Asset**: Represents the cash transactions. - **Noncash Assets**: Represents the non-cash transactions. - **Liabilities**: Represents the company's liabilities. - **Contributed Capital**: Equity contributed by shareholders. - **Earned Capital**: Accumulated profits retained in the business. **Income Statement:** - **Revenues**: Income generated before expenses. - **Expenses**: Costs incurred by the business. - **Net Income**: Profit after expenses. **Transactions to Record:** - **Lourder purchases bonds**: Involves cash payment and bond acquisition. - **Lourder receives cash interest**: Involves cash inflow from interest. - **Bonds year-end fair value is determined**: Affects noncash assets and potentially other financial statement items. - **Lourder sells all bonds**: Involves cash inflow from bond sale, adjustment of assets, and reflection of any gain/loss. Record each transaction accordingly in the table, updating the relevant accounts and ensuring to include any changes in value, gains, or losses as required. Use negative values to indicate decreases in assets or income, as appropriate.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:**Marketable Debt Securities**
Use the financial statement effects template to record the accounts and amounts for the following four transactions involving investments in marketable debt securities classified as available-for-sale securities.
a. Lourder Inc. purchases 10,000 bonds with a face value of $1,000 per bond. The bonds are purchased at par for cash and pay interest at a semi-annual rate of 4%.
b. Lourder receives semi-annual cash interest of $200,000.
c. Year-end fair value of the bonds is $978 per bond.
d. Shortly after year-end, Lourder sells all 10,000 bonds for $970 per bond.
Use negative signs with answers, if appropriate.
**Table Explanation:**
The table is divided into two main sections: Balance Sheet and Income Statement.
**Balance Sheet:**
- **Cash Asset**: Represents the cash transactions.
- **Noncash Assets**: Represents the non-cash transactions.
- **Liabilities**: Represents the company's liabilities.
- **Contributed Capital**: Equity contributed by shareholders.
- **Earned Capital**: Accumulated profits retained in the business.
**Income Statement:**
- **Revenues**: Income generated before expenses.
- **Expenses**: Costs incurred by the business.
- **Net Income**: Profit after expenses.
**Transactions to Record:**
- **Lourder purchases bonds**: Involves cash payment and bond acquisition.
- **Lourder receives cash interest**: Involves cash inflow from interest.
- **Bonds year-end fair value is determined**: Affects noncash assets and potentially other financial statement items.
- **Lourder sells all bonds**: Involves cash inflow from bond sale, adjustment of assets, and reflection of any gain/loss.
Record each transaction accordingly in the table, updating the relevant accounts and ensuring to include any changes in value, gains, or losses as required. Use negative values to indicate decreases in assets or income, as appropriate.
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