Presented below is selected information related to the financial instruments of Pronghorn Company at December 31, 2020. This is Pronghorn Company's first year of operations. Carrying Fair Value Amount (at December 31) Investment in debt securities (intent is to hold to maturity) $42,700 $43,600 Investment in Chen Company stock 848,500 952,100 Bonds payable 237,600 213,400 (a) Pronghorn elects to use the fair value option for these investments. Assuming that Pronghorn's net income is $106,200 in 2020 before reporting any securities gains or losses, determine Pronghorn's net income for 2020. Assume that the difference between the carrying value and fair value is due to credit deterioration. Pronghorn's net income for 2020 210700 (b) Record the journal entry, if any, necessary at December 31, 2020, to record the fair value option for the bonds payable. (Credit account titles are automatically indented when 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.) Date Account Titles and Explanation Debit Credit Dec. 31, 2020 Bonds Payable 24200
Presented below is selected information related to the financial instruments of Pronghorn Company at December 31, 2020. This is Pronghorn Company's first year of operations. Carrying Fair Value Amount (at December 31) Investment in debt securities (intent is to hold to maturity) $42,700 $43,600 Investment in Chen Company stock 848,500 952,100 Bonds payable 237,600 213,400 (a) Pronghorn elects to use the fair value option for these investments. Assuming that Pronghorn's net income is $106,200 in 2020 before reporting any securities gains or losses, determine Pronghorn's net income for 2020. Assume that the difference between the carrying value and fair value is due to credit deterioration. Pronghorn's net income for 2020 210700 (b) Record the journal entry, if any, necessary at December 31, 2020, to record the fair value option for the bonds payable. (Credit account titles are automatically indented when 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.) Date Account Titles and Explanation Debit Credit Dec. 31, 2020 Bonds Payable 24200
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
PLEASE HELP WITH
LIST OF ACCOUNTS
- Accumulated Other Comprehensive Loss
- Allowance for Doubtful Accounts
- Allowance to Reduce Inventory to Market
Bad Debt Expense- Bonds Payable
- Cash
- Call Option
- Common Stock
- Cost of Goods Sold
- Debt Investments
- Dividend Revenue
- Dividend Receivable
- Equity Investments
- Fair Value Adjustment
- Futures Contract
- Gain on Sale of Investments
- Gain on Settlement of Call Option
- Gain on Settlement of Put Option
- Interest Expense
- Interest Receivable
- Interest Revenue
- Inventory
- Investment Income
- Loss on Impairment
- Loss on Sale of Investments
- Loss on Settlement of Call Option
- Loss on Settlement of Put Option
- No Entry
- Notes Payable
- Paid-in Capital in Excess of Par - Common Stock
- Put Option
- Recovery of Loss from Impairment
Retained Earnings - Revenue from Investment
- Sales Revenue
- Swap Contract
- Unrealized Holding Gain or Loss - Equity
- Unrealized Holding Gain or Loss - Income
Transcribed Image Text:Your answer is partially correct.
Presented below is selected information related to the financial instruments of Pronghorn Company at December 31, 2020. This is
Pronghorn Company's first year of operations.
Carrying
Fair Value
Amount
(at December 31)
Investment in debt securities (intent is to hold to maturity)
$42,700
$43,600
Investment in Chen Company stock
848,500
952,100
Bonds payable
237,600
213,400
(a) Pronghorn elects to use the fair value option for these investments. Assuming that Pronghorn's net income is $106,200 in 2020
before reporting any securities gains or losses, determine Pronghorn's net income for 2020. Assume that the difference between the
carrying value and fair value is due to credit deterioration.
Pronghorn's net income for 2020
2$
210700
(b) Record the journal entry, if any, necessary at December 31, 2020, to record the fair value option for the bonds payable. (Credit
account titles are automatically indented when 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.)
Date
Account Titles and Explanation
Debit
Credit
Dec. 31, 2020
Bonds Payable
24200
24200
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