[The following information applies to the questionsdisplayed below.]Mead Incorporated began operations in Year 1. Following isa series of transactions and events involving its long-termdebt investments in available-for-sale securities.Year 1January 20 Purchased Johnson & Johnson bonds for$28,200.February 9Purchased Sony notes for $64,890.Purchased Mattel bonds for $50,500.June 12December 31Fair values for debt in the portfolio areJohnson & Johnson, $33,500; Sony, $53,350;and Mattel, $58,750.Year 2April 15Sold all of the Johnson & Johnson bonds for$33,500.July 5 Sold all of the Mattel bonds for $42,850.July 22 Purchased Sara Lee notes for $20,500.August 19 Purchased Kodak bonds for $22,300.December 31Fair values for debt in the portfolio areKodak, $22,825; Sara Lee, $22,000; and Sony,$66,000.Year 3February 27 Purchased Microsoft bonds for $159,800.June 21 Sold all of the Sony notes for $65,600.June 30 Purchased Black & Decker bonds for $60,400.August 3 Sold all of the Sara Lee notes for $18,750.November 1 Sold all of the Kodak bonds for $26,975.December 31Fair values for debt in the portfolio areBlack & Decker, $60,600; and Microsoft,$160,600.3. Complete the following table that summarizes (a) therealized gains and losses and (b) the unrealized gains orlosses for the portfolio of long-term available-for-sale debtsecurities at each year-end. (Losses should be indicated bya minus sign.)Year 1Year 2Year:Realized gains (losses)Sale of Johnson & JohnsonSale of MattelSale of SonySale of Sara LeeSale of KodakTotal realized gains (losses)Unrealized gains (losses) at year-end$0 $0 $

calculation of above requirement areas follows

Mead Incorporated began operations in Year 1. Following is a series of transactions and events involving its long-term debt investments in available-for-sale securities. Year 1 January 20 Purchased Johnson & Johnson bonds for $28,200. February 9 Purchased Sony notes for $64,890. June 12 Purchased Mattel bonds for $50,500. December 31 Fair values for debt in the portfolio are Johnson & Johnson, $33,500; Sony, $53,350; and Mattel, $58,750. Year 2 April 15 Sold all of the Johnson & Johnson bonds for $33,500. July 5 Sold all of the Mattel bonds for $42,850.

Mead Incorporated began operations in Year 1. Following is a series of transactions and events involving its long-term debt investments in available-for-sale securities. Year 1 January 20 Purchased Johnson & Johnson bonds for $28,200. February 9 Purchased Sony notes for $64,890. June 12 Purchased Mattel bonds for $50,500. December 31 Fair values for debt in the portfolio are Johnson & Johnson, $33,500; Sony, $53,350; and Mattel, $58,750. Year 2 April 15 Sold all of the Johnson & Johnson bonds for $33,500. July 5 Sold all of the Mattel bonds for $42,850.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

It is year 1, the White Caps Ltd.’s first year of operations. White Caps Ltd. had the following transactions regarding their investments: May 1 Purchased 600 Jerry Co. common shares for $180 per share. This investment is classified as held for trading. June 1 Purchased 1,000 bonds of Larry Inc. at $300 each. These bonds pay interest at a rate of 6%, paid semi-annually on November 30 and May 31. These bonds were also purchased for trading purposes. July 1 Purchased 4,000 Barry Ltd. common shares for $210 per share. These shares represent 25% of the issued common shares of Barry ltd. Because of this investment, the directors of Barry Ltd. invited a White Caps Ltd. executive to sit on their board. Sept. 1 Received a $3-per-share cash dividend from Barry Ltd. Nov. 1 Sold 200 Jerry Co. common shares for $189 per share. 30 Interest on the Larry Inc. bonds was received. Dec. 15 A $0.50-per-share cash dividend on Jerry Co. common shares was received. 31 As of this date,…
On January 1, Year 1, Hanover Corporation issued bonds with a $39,000 face value, a stated rate of interest of 8%, and a 5-year term to maturity. The bonds were issued at 97. Hanover uses the straight-line method to amortize bond discounts and premiums. Interest is payable in cash on December 31 each year. How much interest expense will Hanover report on its income statement on December 31, Year 1? Multiple Choice O O O O $234 $1,170 $3.354 $3,120
The following bond investment transactions were completed during a recent year by Starks Company: Year 1 Jan. 31 Purchased 75, $1,000 government bonds at 100 plus accrued interest of $313 (one month). The bonds pay 5% annual interest on July 1 and January 1. July 1 Received semiannual interest on bond investment. Aug. 30 Sold 33, $1,000 bonds at 95 plus $275 accrued interest (two months). Required: a. Journalize the entries for these transactions. Refer to the Chart of Accounts for exact wording of account titles. Assume a 360-day year. b. Provide the December 31, Year 1, adjusting journal entry for semiannual interest earned on the bonds.
1.Prepare Hertog Company’s journal entries to record the following transactions for the current year. May 7 Purchases Kraft bonds as a short-term investment in trading securities at a cost of $10,830. June 6 Sells its entire investment in Kraft bonds for $11,330 cash
The Wilfred Company sold 8% bonds, dated January 1, with a face amount of $90 million on January 1, year 1 to Rexton-Base Corporation. The bonds mature on December 31, year 10 (10 years). For bonds of similar risk and maturity, the market yield is 10%. Interest is paid semiannually on June 30 and December 31. Prepare the journal entry to record interest revenue on June 30, year 1 (at the effective rate).
The Melon Company issues $519,000 of 8%, 10-year bonds at 103 on March 31, Year 1. The bonds pay interest on March 31 and September 30. Assume that the company uses the straight- line method for amortization. Calculate the net balance that will be reported for the bonds on the September 30, Year 1 balance sheet. (Round your intermediate answers to the nearest dollar.) Group of answer choices $533, 791 $535, 349 $519,000 $534, 570
On January 1, Jim Shorts Corporation issued bonds for $580 million. This bond issue was originally issued at premium. During the same year, $1,500,000 of the bond premium was amortized. On a statement of cash flows prepared using the indirect method, Jim Shorts Corporation should report: O that $1.5 million to be added to net income O An investing activity of $580 million. O A financing activity of $300 million. O that $1.5 million to be deducted from net income
Selected debt investment transactions for Easy A Inc., a retail business, are listed below. Easy A Inc. has a fiscal year ending on December 31. Year 1: Feb. 1 May 1 Jun. 1 Sept. 1 Oct. 1 Dec. 1 Dec. 31 Year 2: Mar. 1 Jun. 1 Sept. 1 Bought $35,000 of 6%, XYZ Co. 12-year bonds at their face amount plus accrued interest of $700. The bonds pay interest semiannually on June 1 and December 1. Bought $200,000 of Simple Tree 5%, 20-year bonds at their face amount plus accrued interest of $2,500. The bonds pay interest semiannually on March 1 and September 1. Received semiannual interest on the XYZ Co. bonds. Received semiannual interest on the Simple Tree bonds. Sold $15,000 of Simple Tree bonds at 102% plus accrued interest of $63. Received semiannual interest on the XYZ Co. bonds. Accrued $3,135 interest on the Simple Tree bonds. Accrued $175 interest on the XYZ Co. bonds. Received semiannual interest on the Simple Tree bonds. Received semiannual interest on the XYZ Co. bonds. Received…
Prepare journal entries to record the following transactions involving short-term debt investments.
On January 1 of the current year, the Queen Corporation issued 12% bonds with a face value of $83,000. The bonds are sold for $80,510. The bonds pay interest semiannually on June 30 and December 31 and the maturity date is December 31, five years from now. Queen records straight-line amortization of the bond discount. Determine the bond interest expense for the year ended December 31. Select the correct answer. a-$830 b-$10,458 c-$2,490 d-$9,960