On October 1, Year 6, Whitney Company declared a property dividend payable in the form of marketable equity securities classified as "trading" for financial accounting purposes. The marketable equity securities will be distributed to the common stockholders on December 1, Year 6. The investment in equity securities originally cost Whitney $510,000 on August 1, Year 6. The investment's fair value on various dates is as follows: October 1, Year 6 $530,000 December 1, Year 6 535,000 December 31, Year 6 540,000

On October 1, Year 6, Whitney Company declared a property dividend payable in the form of marketable equity securities classified as "trading" for financial accounting purposes. The marketable equity securities will be distributed to the common stockholders on December 1, Year 6. The investment in equity securities originally cost Whitney $510,000 on August 1, Year 6. The investment's fair value on various dates is as follows: October 1, Year 6 $530,000 December 1, Year 6 535,000 December 31, Year 6 540,000

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter15: Contributed Capital

Section: Chapter Questions

Problem 1MC

See similar textbooks

Similar questions

During 2021, Anthony Company purchased debt securities as a long-term investment and classified them as trading. All securities were purchased at par value. Pertinent data are as follows: The net holding gain or loss included in Anthonys income statement for the year should be: a. 0 b. 3,000 gain c. 9,000 loss d. 12,000 loss
On July 1, Year 1, XYZ Corporation purchased as a long-term investment a $2 million face amountABC Co. 6% bond for $2,025,000 plus accrued interest to yield 5.75%. On December 31, Year 1,the bonds had a fair value of $1,850,000. What amount of income should XYZ report on its incomestatement for the year ended December 31, Year 1, related to this bond investment if it is classifiedas a held-to-maturity security?a. $120,000b. $116,438c. $121,500d. $115,000
York Corporation declares a property dividend on June 30, payable in bonds of Laurens Company, which are classified as “available for sale.” The bonds are recorded at a fair value of $58,000 (there is a $0 balance in Allowance for Change in the Value of Investment in Available-for-Sale Securities), but at the time of the property dividend have a current value of $67,000. Prepare the journal entries to record the declaration of this property dividend.
Brave Industries owned investment securities with a book value of $20 million on August 12. At that time, Brave's board of directors declared a property dividend consisting of these securities. The fair value of the securities was as follows: Declaration --- August 12 Date of record --- September 1 Distribution date --- September 20 By how much is total stockholder' equity reduced by the property dividend? $31 million $30 million $27 million $20 million $28 million 30 million 31 million
On January I of Year 1, Steve Company purchased the following securities. Security Type Classification Cost Bond Trading $5,000 B Stock Trading 27,500 Stock Available for sale $10,000 D Bond Available for sale 17,000 E Stock Available for sale 9,200 Steve Company sold all of its investment in Security D for $8,900 on October 31 of Year 1. On December 31 of Year 1, the following fair values were available for Securities A.BC, and E (with Security D having been sold on October 31). Security Type Classification Cost Market Value (end Year 1) A Bond Trading 55,000 $3,200 Stock Trading 27,500 36,700 Stock Available for sale s10,000 $14,000 Stock Available for sale 9,200 6,000 Compute the TOTAL. amount of net UNrealized gain or loss that will be reported in Steve Company's OTHER COMPREHENSIVE INCOME for Year 1. Net gain $8,200 Net gain of $6,000 Net gain $9.000 O Net gain of $7,400 Net gain of $800 FEEDBACK 0/1 (0.0%)
On September 1, Indigo Corporation had the following investments classified as held for trading purposes: $71,000,6% FMC Co, bond, purchased previously by indigo at 101. Interest on the bond is payable semi-annually on January 1 and July 13 $130,000 3% Government of Canada bond, previously purchased by indigo at 98. interest on the bond is payable semi-annually on March 31, and September 30. During the month of September, the following transactions took places Sept. 1: Sept. 30 Sept. 30 Sept. 30 Purchased $63,000 4% Alpha inc. bond at 99. Interest is payable annually on August 31. Received interest on Government of Canada bond. Data Sold the Government of Canada bond at 97. Fair value on FMC Co. bond is $74,550 and fair value of Alpha Inc. bond is $61,740. Record the transactions that occurred in September and prepare any adjusting entries required at September 30. indigo Corporation is a public company and has a September 30 year end. (Credit account titles are automatically indented…
On February 15, Jewel Company buys bonds of Marcelo Corp. for $201,700. The investment is classified as available-for-sale securities. This is the company’s first and only investment in available-for-sale securities. On December 31, the bonds had a fair value of $203,700. The entry to record the year-end adjustment is:
Brooks Co. purchases debt investments as trading securities at a cost of $66,000 on December 27. This is its first and only purchase of such securities. At December 31, these securities had a fair value of $72,000. 1. Prepare the December 27 entry for the purchase of debt investments. 2. Prepare the December 31 year-end fair value adjusting entry for the trading securities’ portfolio. 3. Prepare the January 3 entry when Brooks sells a portion of its trading securities (costing $3,000) for $4,000 cash.
Lance Brothers Enterprises acquired $720,000 of 3% bonds, dated July 1, on July 1, 2021, as a long-term investment. Management has the positive intent and ability to hold the bonds until maturity. The market interest rate (yield) was 4% for bonds of similar risk and maturity. Lance Brothers paid $600,000 for the investment in bonds and will receive interest semiannually on June 30 and December 31. Prepare the journal entries (a) to record Lance Brothers’ investment in the bonds on July 1, 2021, and (b) to record interest on December 31, 2021, at the effective (market) rate.
Mills Corporation acquired as a long-term investment $240,000 of 6% bonds, dated July 1, on July 1, 2021. Company management has the positive intent and ability to hold the bonds until maturity. The market interest rate (yield) was 8% for bonds of similar risk and maturity. Mills paid $200,000 for the bonds. The company will receive interest semiannually on June 30 and December 31. As a result of changing market conditions, the fair value of the bonds at December 31, 2021, was $210,000. Required: Prepare the journal entry to record Mills's investment in the bonds on July 1, 2021 and interest on December 31, 2021, at the effective (market) rate. At what amount will Mills report its investment in the December 31, 2021, balance sheet? Suppose Moody's bond rating agency downgraded the risk rating of the bonds motivating Mills to sell the investment on January 2, 2022, for $190,000. Prepare the journal entry to record the sale. No 2 Date 1-Jul-21 No 1 31-Dec-21 Investment Date 2-Jan-22…
Bucks' Corporation purchases debt investments as trading securities at acost of $150,000on December .1 This si its first and only purchase of such securities. On January 5, Buck's Corporation decidesot sel aportion foits trading securities ( costing $18,000) for $20,000 cash. Prepare the journal entry ot record the January 5sale:
G’s investment account relates to its debt investments and its equity investments. For balance sheet presentation, G includes any separate investment-related adjustment accounts with the investment account. Information about G’s investments follows: o On 06-30-21, G purchased 45, $1,000 3% bonds when similar bonds were paying 3.5%. G incurred and paid $600 of bond purchase-related costs. The bonds were dated 06-30-21, pay interest each June 30 and December 31, and mature on 06-30-25. G classified the bonds as a trading investment. As of 12-31-21, the bonds traded at 99. o On 06-30-19, G purchased 40, $1,000 5% bonds when similar bonds were paying 5%. G incurred and paid $400 of bond purchase-related costs. The bonds were dated 06-30-19 and pay interest each June 30 and December 31 and mature on 06-30-24. G classified these bonds as an available-for-sale investment. The bonds were trading at the following amounts as of the following dates:12-31-19 10012-31-20 10212-31-21 101