Prepare the journal entries to record the recognition of fair value for 2023 and assuming the investment is sold for $260,000 on December 31, 2023, reclassifying any accumulated holding gains or losses to net income. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts List all debit entries before credit entries. Round answers to 2 decimal places, eg. 52.75)
Prepare the journal entries to record the recognition of fair value for 2023 and assuming the investment is sold for $260,000 on December 31, 2023, reclassifying any accumulated holding gains or losses to net income. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts List all debit entries before credit entries. Round answers to 2 decimal places, eg. 52.75)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
A3
Transcribed Image Text:Prepare the journal entries to record the recognition of fair value for 2023 and assuming the investment is sold for $260,000 on
December 31, 2023, reclassifying any accumulated holding gains or losses to net income. (Credit account titles are automatically
indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account titles and enter O for
the amounts. List all debit entries before credit entries. Round answers to 2 decimal places, e.g. 52.75)
Date Account Titles and Explanation
Dec. 31
Dec. 31
Dec. 31
Bond Investment at Amortized Cost
Cash
(To adjust to fair value at date of disposal)
(To record disposal)
Unrealized Gain or Loss
(To reclassify holding loss)
Debit
Credit
11
Transcribed Image Text:On January 1, 2022, Culver and Lois Company purchased 12% bonds having a maturity value of $252,000 for $271,105.56. The bonds
provide the bondholders with a 10% yield. They are dated January 1, 2022, and mature on January 1, 2027, with interest receivable
on December 31 of each year. Culver and Lois Company uses the effective interest method to allocate unamortized discount or
premium. The bonds are carried at FV-OCI. The fair value of the bonds at December 31 of each year-end is as follows:
2022 $269,000
$260,000
2023
Your answer is correct.
Prepare the journal entries to record the interest received and recognition of fair value for 2022. (Credit account tities are
automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account titles
and enter 0 for the amounts. List all debit entries before credit entries. Round answers to 2 decimal places, eg. 52.75.)
Date Account Titles and Explanation
Dec. 31
Dec. 31
Cash
FV-OCI Investments
interest income
(To record collection of interest)
FV-OCI Investments
Unrealized Gain or Loss-OCI
(To record fair value adjustment)
Debit
30,240
1.023.88
Credit
3,129.44
27.110.56
1,023.88
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