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Rantzow-Lear Company buys and sells debt securities expecting to earn profits on short-term differences in price. The company's fiscal year ends on December 31. The following selected transactions relating to Rantzow-Lear's trading account occurred during December 2018 and the first week of 2019. 2018 Dec. 17 Purchased 125 Grocers Supply Corporation bonds for $437,500. 28 Received interest of $3,000 from the Grocers' Supply Corporation bonds. 31 Recorded any necessary adjusting entry relating to the Grocers' Supply Corporation bonds. The market price of the bonds were $4,000 per bond. 2019 Jan. 5 Sold the Grocers' Supply Corporation bonds for $468,750. Required: 1. Prepare the appropriate journal entry or entries for each transaction. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Rantzow-Lear Company buys and sells debt securities expecting to earn profits on short-term differences in price. The company's fiscal year ends on December 31. The following selected transactions relating to Rantzow-Lear's trading account occurred during December 2018 and the first week of 2019. 2018 Dec. 17 Purchased 125 Grocers Supply Corporation bonds for $437,500. 28 Received interest of $3,000 from the Grocers' Supply Corporation bonds. 31 Recorded any necessary adjusting entry relating to the Grocers' Supply Corporation bonds. The market price of the bonds were $4,000 per bond. 2019 Jan. 5 Sold the Grocers' Supply Corporation bonds for $468,750. Required: 1. Prepare the appropriate journal entry or entries for each transaction. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

FINANCIAL ACCOUNTING
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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No 1 2 3 4 5 Date General Journal December 17, 2018 Investment in Grocers' Supply bonds Cash December 28, 2018 Cash Answer is complete but not entirely correct. December 31, 2018 Fair value adjustment Interest revenue January 05, 2019 Unrealized holding loss-NI Fair value adjustment January 05, 2019 Cash Unrealized holding gain-NI Trading securities 9 Show Transcribed Text Gain on investments Investment in Grocers' Supply bonds Investment revenue Unrealized holding gain Balance Sheet (short-term investment): Answer is complete but not entirely correct. Income Statement: ✓S 3* 33 33 ✓ X S ›› ›› ✓ 3* 3 x $ 500,000 Debit 437,500 3,000 62,500✔ 3,000 2. Indicate any amounts that Rantzow-Lear Company would report in its 2018 balance sheet and income statement as a result of this investment. 62,500 62,500 x 468,750 Credit 437,500 3,000 62,500 62,500 X 31,250 437,500
Transcribed Image Text:No 1 2 3 4 5 Date General Journal December 17, 2018 Investment in Grocers' Supply bonds Cash December 28, 2018 Cash Answer is complete but not entirely correct. December 31, 2018 Fair value adjustment Interest revenue January 05, 2019 Unrealized holding loss-NI Fair value adjustment January 05, 2019 Cash Unrealized holding gain-NI Trading securities 9 Show Transcribed Text Gain on investments Investment in Grocers' Supply bonds Investment revenue Unrealized holding gain Balance Sheet (short-term investment): Answer is complete but not entirely correct. Income Statement: ✓S 3* 33 33 ✓ X S ›› ›› ✓ 3* 3 x $ 500,000 Debit 437,500 3,000 62,500✔ 3,000 2. Indicate any amounts that Rantzow-Lear Company would report in its 2018 balance sheet and income statement as a result of this investment. 62,500 62,500 x 468,750 Credit 437,500 3,000 62,500 62,500 X 31,250 437,500
Rantzow-Lear Company buys and sells debt securities expecting to earn profits on short-term differences in price. The company's fiscal year ends on December 31. The following selected transactions relating to Rantzow-Lear's trading account occurred during December 2018 and the first week of 2019. 2018 Dec. 17 Purchased 125 Grocers' Supply Corporation bonds for $437,500. 28 Received interest of $3,000 from the Grocers' Supply Corporation bonds. 31 Recorded any necessary adjusting entry relating to the Grocers' Supply Corporation bonds. The market price of the bonds were $4,000 per bond. 2019 Jan. 5 Sold the Grocers' Supply Corporation bonds for $468,750. Required: 1. Prepare the appropriate journal entry or entries for each transaction. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Transcribed Image Text:Rantzow-Lear Company buys and sells debt securities expecting to earn profits on short-term differences in price. The company's fiscal year ends on December 31. The following selected transactions relating to Rantzow-Lear's trading account occurred during December 2018 and the first week of 2019. 2018 Dec. 17 Purchased 125 Grocers' Supply Corporation bonds for $437,500. 28 Received interest of $3,000 from the Grocers' Supply Corporation bonds. 31 Recorded any necessary adjusting entry relating to the Grocers' Supply Corporation bonds. The market price of the bonds were $4,000 per bond. 2019 Jan. 5 Sold the Grocers' Supply Corporation bonds for $468,750. Required: 1. Prepare the appropriate journal entry or entries for each transaction. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
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