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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 of a PO amo E p 1 supend!

Rantzow-Lear Company buys and sells debt securities expecting to earn profits on short-term differences in price, and holds these of a PO amo E p 1 supend!

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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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 2024 and the first week of 2025. December 17, 2024 Purchased 140 Grocers' Supply Corporation bonds at par for $630,000. December 28, 2024 Received interest of $3,600 from the Grocers' Supply Corporation bonds. December 31, 2024 Recorded any necessary adjusting entry relating to the Grocers' Supply Corporation bonds. The market price of the bond was $5,000 per bond. January 5, 2025 Sold the Grocers' Supply Corporation bonds for $665,000. Required: 1. Prepare the appropriate journal entry or entries for each transaction. 2. Indicate any amounts that Rantzow-Lear Company would report in its 2024 balance sheet and income statement as a result of this investment. Ignore income taxes.
Transcribed Image Text: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 2024 and the first week of 2025. December 17, 2024 Purchased 140 Grocers' Supply Corporation bonds at par for $630,000. December 28, 2024 Received interest of $3,600 from the Grocers' Supply Corporation bonds. December 31, 2024 Recorded any necessary adjusting entry relating to the Grocers' Supply Corporation bonds. The market price of the bond was $5,000 per bond. January 5, 2025 Sold the Grocers' Supply Corporation bonds for $665,000. Required: 1. Prepare the appropriate journal entry or entries for each transaction. 2. Indicate any amounts that Rantzow-Lear Company would report in its 2024 balance sheet and income statement as a result of this investment. Ignore income taxes.
Required 1 Required 2 Prepare the appropriate journal entry or entries for each transaction. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. No 1 2 3 4 5 Date December 17, 202- Investment in bonds Cash December 28, 2024 Cash December 31, 202- Fair value adjustment Interest revenue w Transcribed Text January 05, 2025 Loss on investments (unrealized, NI) Fair value adjustment January 05, 2025 Cash Gain on investments (unrealized, NI) Investment in bonds Retained earnings General Journal Investment in bonds Fair value adjustment Complete this question by entering your answers in the tabs below. Balance Sheet December 31, 2024 Gain on investments Interest revenue Income Statement: Debit 630,000 $ 700,000 70,000 3,600 70,000 3,600 70,000 Answer is complete but not entirely correct. 35,000 665,000 Credit Required 1 Required 2 Indicate any amounts that Rantzow-Lear Company would report in its 2024 balance sheet and income statement as a result of this investment. Ignore income taxes. 630,000 3,600 70,000 35,000 630,000 35,000
Transcribed Image Text:Required 1 Required 2 Prepare the appropriate journal entry or entries for each transaction. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. No 1 2 3 4 5 Date December 17, 202- Investment in bonds Cash December 28, 2024 Cash December 31, 202- Fair value adjustment Interest revenue w Transcribed Text January 05, 2025 Loss on investments (unrealized, NI) Fair value adjustment January 05, 2025 Cash Gain on investments (unrealized, NI) Investment in bonds Retained earnings General Journal Investment in bonds Fair value adjustment Complete this question by entering your answers in the tabs below. Balance Sheet December 31, 2024 Gain on investments Interest revenue Income Statement: Debit 630,000 $ 700,000 70,000 3,600 70,000 3,600 70,000 Answer is complete but not entirely correct. 35,000 665,000 Credit Required 1 Required 2 Indicate any amounts that Rantzow-Lear Company would report in its 2024 balance sheet and income statement as a result of this investment. Ignore income taxes. 630,000 3,600 70,000 35,000 630,000 35,000
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