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.
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.
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 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 |
|||
| 2022 | ||||
| Jan. | 5 | Sold the Grocers' Supply Corporation bonds for $399,000. |
Required:
1. Prepare the appropriate
2. Indicate any amounts that Rantzow-Lear Company would report in its 2021
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