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 105 Grocers’ Supply Corporation bonds at par for $367,500.     28   Received interest of $2,200 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 $4,000 per bond. 2022         Jan.   5   Sold the Grocers' Supply Corporation bonds for $399,000.   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.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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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 105 Grocers’ Supply Corporation bonds at par for $367,500.
    28   Received interest of $2,200 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 $4,000 per bond.
2022        
Jan.   5   Sold the Grocers' Supply Corporation bonds for $399,000.

 
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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