Rantzow-Lear Company buys and sells debt securities expecting to earn profits on short-term differences in price, and holds these investments in its trading portfolio. The company’s fiscal year ends on December 31. The following selected transactions relating to Rantzow-Lear’s trading account occurred during December 2021 and the first week of 2022. 2021 Dec. 17 Purchased 180 Grocers’ Supply Corporation bonds at par for $450,000. 28 Received interest of $5,200 from the Grocers’ Supply Corporation bonds. 31 Recorded any necessary adjusting entry relating to the Grocers’ Supply Corporation bonds. The market price of the bond was $3,000 per bond.2022 Jan. 5 Sold the Grocers' Supply Corporation bonds for $513,000. Required:1. Prepare the appropriate journal entry or entries for each transaction.2. Indicate any amounts that Rantzow-Lear Company would report in its 2021 balance sheet and income statement as a result of this investment.

Bonds: Bonds indicate fixed-income financial instruments issued by Corporates, any government, and…

Answered: Rantzow-Lear Company buys and sells…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Rantzow-Lear Company buys and sells debt securities expecting to earn profits on short-term differences in price, and holds these investments in its trading portfolio. The company’s fiscal year ends on December 31. The following selected transactions relating to Rantzow-Lear’s trading account occurred during December 2021 and the first week of 2022.

2021
Dec.	17	Purchased 180 Grocers’ Supply Corporation bonds at par for $450,000.
	28	Received interest of $5,200 from the Grocers’ Supply Corporation bonds.
	31	Recorded any necessary adjusting entry relating to the Grocers’ Supply Corporation bonds. The market price of the bond was $3,000 per bond.
2022
Jan.	5	Sold the Grocers' Supply Corporation bonds for $513,000.

Required:
1. Prepare the appropriate journal entry or entries for each transaction.
2. Indicate any amounts that Rantzow-Lear Company would report in its 2021 balance sheet and income statement as a result of this investment.

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