Problem 9-9 The following information relates to the debt securities investments of Martinez Company: 1. On February 1, the company purchases 10% bonds of Gibbons Co. having a par value of $282,000 at 100 plus accrued interest. Interest is payable April 1 and October 1. 2. On April 1, semi-annual interest is received. 3. On July 1, 9% bonds of Sampson Inc. are purchased. These bonds with a par value of $188,000 are purchased at 100 plus accrued interest. Interest dates are June 1 and December 1. On October 1, semi-annual interest is received. 5. 4. On December 1, semi-annual interest is received. On December 31, the fair values of the bonds purchased on February 1 and July 1 are 95 and 93, respectively. 6. eexcept for the Prepare any journal entries you consider necessary, including year-end enales and enter o for the a ats, Record journal entrie Do no use interest receivabie eroblem ear end accrual.) (Credit account titles are automatically indented when the amount is entered. Do not indent (December 31), assuming are FV-OCI manually. If no entry is required, select "No Entry" for the account in the order presented in Date Account Titles and Explanation Debit Credit Feb. 1 July 1 (To accrue interest) (To record fair value adjustment)
Problem 9-9 The following information relates to the debt securities investments of Martinez Company: 1. On February 1, the company purchases 10% bonds of Gibbons Co. having a par value of $282,000 at 100 plus accrued interest. Interest is payable April 1 and October 1. 2. On April 1, semi-annual interest is received. 3. On July 1, 9% bonds of Sampson Inc. are purchased. These bonds with a par value of $188,000 are purchased at 100 plus accrued interest. Interest dates are June 1 and December 1. On October 1, semi-annual interest is received. 5. 4. On December 1, semi-annual interest is received. On December 31, the fair values of the bonds purchased on February 1 and July 1 are 95 and 93, respectively. 6. eexcept for the Prepare any journal entries you consider necessary, including year-end enales and enter o for the a ats, Record journal entrie Do no use interest receivabie eroblem ear end accrual.) (Credit account titles are automatically indented when the amount is entered. Do not indent (December 31), assuming are FV-OCI manually. If no entry is required, select "No Entry" for the account in the order presented in Date Account Titles and Explanation Debit Credit Feb. 1 July 1 (To accrue interest) (To record fair value adjustment)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:If Martinez Company classified these as cost/amortized cost, explain how the journal entries would differ from those in part (a). (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 0 for the amounts. Record journal entries in the order presented in the problem.)
Date
Account Titles and Explanation
Debit
Credit
Feb. 1
July 1
(To record accrued interest)
(To record unrealized gain or loss on valuation of shares at fair value)
| || |
Transcribed Image Text:Problem 9-9
The following information relates to the debt securities investments of Martinez Company:
On February 1, the company purchases 10% bonds of Gibbons Co. having a par value of $282,000 at 100 plus accrued interest. Interest is payable April 1 and October 1.
On April 1, semi-annual interest is received.
On July 1, 9% bonds of Sampson Inc. are purchased. These bonds with a par value of $188,000 are purchased at 100 plus accrued interest. Interest dates are June 1 and December 1.
On October 1, semi-annual interest is received.
On December 1, semi-annual interest is received.
On December 31, the fair values of the bonds purchased on February 1 and July 1 are 95 and 93, respectively.
1.
2.
3.
4.
5.
6.
Prepare any journal entries you consider necessary, including year-end entries (December 31), assuming these are FV-OCI securities. (Hint: Do no use interest receivable except for the year end accrual.) (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. Record journal entries in the order presented in the problem.)
Date
Account Titles and Explanation
Debit
Credit
Feb. 1
July 1
(To accrue interest)
(To record fair value adjustment)
I || |
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