Sheffield Limited has two debt securities classified as FV-OCI. For the Chan bonds, assume the amortization table noted below. Assume further that the Anacomp bonds were purchased at par value (therefore there is no premium or discount) and that no impairment exists. Bonds Purchased to Yield 11% Cash Date Received Interest Income Bond Discount Amortization Amortized Cost of Bonds 1/1/23 $109,106 7/1/23 $5,310 $6,001 $691 109,797 1/1/24 5.310 6,039 729 110,526 7/1/24 5,310 6,079 769 111,295 1/1/25 5,310 6,121 811 112,106 7/1/25 5,310 6,166 856 112,962 1/1/26 5,310 6,213 903 113,865 7/1/26 5,310 6,263 953 114,818 1/1/27 5,310 6,315 1,005 115,823 7/1/27 5,310 6,370 1,060 116,883 1/1/28 5,310 6,427 1,117 118,000 Total $53,100 $61,994 $8,894 FV-OCI Investment Portfolio December 31, 2023 Investments in Bonds Amortized Cost Fair Value Unrealized Gain (Loss) Chan Corporation 8% bonds $110,526 $120,500 $9,974 Anacomp Corporation 10% bonds 184,900 165,000 (19,900) Total portfolio $295,426 $285,500 (9,926) Previous fair value adjustment balance -0- Fair value adjustment-Cr. $(9.926) Assume that Sheffield sold the Chan bonds on July 1, 2024, for $107,000, at which time they had an amortized cost of $111,295 (after adjusting for discount amortization of $769). Assume further that the fair value of the Anacomp bonds at December 31, 2024, is $180,300. There was no other activity in the investment portfolio between July 1 and December 31, 2024. (a1) Prepare the journal entry to record the sale. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) Date Account Titles and Explanation July 1/24 Debit Credit July 1/24 July 1/24 (To revalue the investment to fair value) (To recognize the sale) (To reclassify the accumulated unrealized gain or loss)
Sheffield Limited has two debt securities classified as FV-OCI. For the Chan bonds, assume the amortization table noted below. Assume further that the Anacomp bonds were purchased at par value (therefore there is no premium or discount) and that no impairment exists. Bonds Purchased to Yield 11% Cash Date Received Interest Income Bond Discount Amortization Amortized Cost of Bonds 1/1/23 $109,106 7/1/23 $5,310 $6,001 $691 109,797 1/1/24 5.310 6,039 729 110,526 7/1/24 5,310 6,079 769 111,295 1/1/25 5,310 6,121 811 112,106 7/1/25 5,310 6,166 856 112,962 1/1/26 5,310 6,213 903 113,865 7/1/26 5,310 6,263 953 114,818 1/1/27 5,310 6,315 1,005 115,823 7/1/27 5,310 6,370 1,060 116,883 1/1/28 5,310 6,427 1,117 118,000 Total $53,100 $61,994 $8,894 FV-OCI Investment Portfolio December 31, 2023 Investments in Bonds Amortized Cost Fair Value Unrealized Gain (Loss) Chan Corporation 8% bonds $110,526 $120,500 $9,974 Anacomp Corporation 10% bonds 184,900 165,000 (19,900) Total portfolio $295,426 $285,500 (9,926) Previous fair value adjustment balance -0- Fair value adjustment-Cr. $(9.926) Assume that Sheffield sold the Chan bonds on July 1, 2024, for $107,000, at which time they had an amortized cost of $111,295 (after adjusting for discount amortization of $769). Assume further that the fair value of the Anacomp bonds at December 31, 2024, is $180,300. There was no other activity in the investment portfolio between July 1 and December 31, 2024. (a1) Prepare the journal entry to record the sale. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) Date Account Titles and Explanation July 1/24 Debit Credit July 1/24 July 1/24 (To revalue the investment to fair value) (To recognize the sale) (To reclassify the accumulated unrealized gain or loss)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Sheffield Limited has two debt securities classified as FV-OCI. For the Chan bonds, assume the amortization table noted below.
Assume further that the Anacomp bonds were purchased at par value (therefore there is no premium or discount) and that no
impairment exists.
Bonds Purchased to Yield 11%
Cash
Date
Received
Interest
Income
Bond Discount
Amortization
Amortized
Cost of Bonds
1/1/23
$109,106
7/1/23
$5,310
$6,001
$691
109,797
1/1/24
5.310
6,039
729
110,526
7/1/24
5,310
6,079
769
111,295
1/1/25
5,310
6,121
811
112,106
7/1/25
5,310
6,166
856
112,962
1/1/26
5,310
6,213
903
113,865
7/1/26
5,310
6,263
953
114,818
1/1/27
5,310
6,315
1,005
115,823
7/1/27
5,310
6,370
1,060
116,883
1/1/28
5,310
6,427
1,117
118,000
Total
$53,100
$61,994
$8,894
FV-OCI Investment Portfolio
December 31, 2023
Investments in Bonds
Amortized
Cost
Fair
Value
Unrealized
Gain (Loss)
Chan Corporation 8% bonds
$110,526 $120,500
$9,974
Anacomp Corporation 10% bonds
184,900
165,000
(19,900)
Total portfolio
$295,426
$285,500
(9,926)
Previous fair value adjustment balance
-0-
Fair value adjustment-Cr.
$(9.926)
Assume that Sheffield sold the Chan bonds on July 1, 2024, for $107,000, at which time they had an amortized cost of $111,295 (after
adjusting for discount amortization of $769). Assume further that the fair value of the Anacomp bonds at December 31, 2024, is
$180,300. There was no other activity in the investment portfolio between July 1 and December 31, 2024.
Transcribed Image Text:(a1)
Prepare the journal entry to record the sale. (Credit account titles are automatically indented when the amount is entered. Do not
indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before
credit entries.)
Date Account Titles and Explanation
July
1/24
Debit
Credit
July
1/24
July
1/24
(To revalue the investment to fair value)
(To recognize the sale)
(To reclassify the accumulated unrealized gain or loss)
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