While reviewing the March 31, 2020, balance sheet of Business Solutions, Santana Rey notes that the business has built a large cash balance of $68,057. Its most recent bank money market statement shows that the funds are earning an annualized return of 0.75%. S. Rey decides to make several investments with the desire to earn a higher return on the idle cash balance. Accordingly, in April 2020, Business Solutions makes the following investments in trading securities. Apr. 16 Purchases Johnson & Johnson bonds for $10,000. Apr. 30 Purchases Starbucks notes for $4,400. On June 30, 2020, the fair value of the Johnson & Johnson bonds is $12,000 and the Starbucks notes is $3,800. Required 1. Prepare journal entries to record the April purchases of trading securities by Business Solutions. 2. On June 30, 2020, prepare the adjusting entry to record any necessary fair value adjustment to its portfolio of trading securities.

While reviewing the March 31, 2020, balance sheet of Business Solutions, Santana Rey notes that the business has built a large cash balance of $68,057. Its most recent bank money market statement shows that the funds are earning an annualized return of 0.75%. S. Rey decides to make several investments with the desire to earn a higher return on the idle cash balance. Accordingly, in April 2020, Business Solutions makes the following investments in trading securities. Apr. 16 Purchases Johnson & Johnson bonds for $10,000. Apr. 30 Purchases Starbucks notes for $4,400. On June 30, 2020, the fair value of the Johnson & Johnson bonds is $12,000 and the Starbucks notes is $3,800. Required 1. Prepare journal entries to record the April purchases of trading securities by Business Solutions. 2. On June 30, 2020, prepare the adjusting entry to record any necessary fair value adjustment to its portfolio of trading securities.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter9: Accounting For Receivables

Section: Chapter Questions

Problem 10EB: Starlight Enterprises has net credit sales for 2019 in the amount of $2,600,325, beginning accounts...

See similar textbooks

Related questions

Q: Rainbow Company's December 31, 2019 bank statement showed a balance of $53,410. Rainbow's December…

A: Hey, since there are multiple questions posted, we will answer the first question. If you want any…

Q: using 360 days in a year, how much cash did thunder company receive from the bank?

A: Given information is: On september 1 thunder company received an p80,000, 12%, 120-day note from a…

Q: On January 1, 2025, Sunland Company makes the two following acquisitions 1 Purchases and having a…

A: Time Value of Money:— According to this concept, the value of money in the present day is greater…

Q: A company wants to raise funds by issuing a 180-day $1,000,000 bank bill on 1 January 2017 at a…

A: No. of days pending for redemption on 12 March 2017 is 108 days (180-72). The interest rate for 108…

Q: Florenda Quino Forwarders borrowed P600,000 from the bank on Sept. 1, 2019. The note carried an 8%…

A: Solution: The interest rate is missing, so I looked for similar questions and found that it is 8%:…

Q: A private enterprise sold some merchandise for $160,000 on January 1, 2020. The customer paid…

A: It is the current value of future sum of money to be received at specified interest rate

Q: User During 2024, Teal Co. borrowed cash from Martinez Company by issuing notes payable as follows:…

A: The journal entry refers to the posting of business transactions in the books of accounts. The…

Q: I need to figure out cash flow from financial activities for 2017 Dec 18 2017 : Borrowed $60,000…

A: Cash flow from financial activities are those activities which are related to provide finances for…

Q: On September 1, 2021, Middleton Corp. lends cash and accepts a $10,000 note receivable that offers…

A: Interest revenue Middleton Corp. will report during 2022 = Face value of note receivable x rate of…

Q: Santana Rey has consulted with her local banker and is considering financing an expansion of her…

A: The measure for determining the proportion of debt and equity used in the company can be done…

Q: On 1/1/17, Carl Weathers Corp. purchases an asset and promises to make four annual payments of…

A: The discount to notes payable is the discount which has been occurred at the time when a fixed…

Q: Stern Corporation borrowed $10 million cash on September 1, 2021, to provide additional working…

A: Here the interest is divided for the first 4 months and the next 2 months.

Q: During 2024, Lane Co. borrowed cash from Greenberg Company by issuing notes payable as follows: 1.…

A: The company can borrow funds by issuing notes. The amount borrowed by issuing notes is shown as…

Q: Striker Company has the following balances at fiscal year ended September 30, 2020: Cash in checking…

A: Cash and cash equivalent represent the current assets reported in the balance sheet of the company.…

Q: Cumberland City Cycles, Inc. opened a checking account at First City Bank when it opened on January…

A: Bank reconciliation statement refers to a reconciliation between the entries entered in the cash…

Q: Frisco Company borrowed $76,000 cash on October 1, 2022, and signed a nine-month, 9%…

A: To determine the amount of interest expense to be reported in 2023, we need to calculate the…

Q: Crafty Cave Products borrowed $200,000 cash by issuing a 48-month, $246,660 zero coupon note on…

A: A promissory note is a legal document issued to raise money. It consists of promises made by the…

Q: You have been asked to analyze First Union Bank. You have only the following information on the bank…

A: Total Debt = $1800000Bank's Debt Ratio = 60%Debt ratio is ratio of total debt to total assets.

Q: on january 1, 2024 sandhill company issued for cash a 1,100,000, 3-year note bearing annual interest…

A: Total issue amount refers to the aggregate principal amount of loan notes to be issued through…

Q: The following information pertains to Sunland Ltd. In 2024 the company entered into new borrowings…

A: Under the accrual method of accounting, the revenue or expense is recorded based on the accrual of…

Q: 4/30/19 bank statement 900 /19 7,000 0/19 10,400 April 40 usted cash balance at April 30, 2019?

A: BRS is the statement which gives the reasons for difference in bank column and bank statement.

Q: (Expected Cash Flows) On December 31, 2017, Conchita Martinez Company signed a $1,000,000 note to…

A: a) Computation of cash received from loan: Hence, Cash received on December 31,2017 is $927,904.48.…

Q: On January 1, 2018, Brown Co. borrowed cash from First Bank by issuing a $42,000 face value,…

A: Financial statements are essential documents that give a thorough summary of a company's financial…

Q: Use the following information which relates to ABC Limited to answer the questions which follow:…

A: Budgeting is a method of estimating expected future outcomes based on past events. Budgeting…

Q: Melinda Almazan, an angel investor decided to invest P1,200,000 excess cash in certificate of…

A: The question is based on the concept of Financial Management.

Q: On July 1, 2022, an auditing firm obtained a three-year 10% note receivable for auditing services…

A: Issue price of the note = Present value of principal + Present value of interest payments where,…

Q: Question. During 2024, Royal Co. borrowed cash from another company by issuing notes payable as…

A: The journal entry refers to the posting of business transactions in the books of accounts. The…

Q: On November 1, 2021, FDN Trading accepted a 90-day, 8% P9,000,000 note from ABC Co. FDN immediately…

A: Maturity value of the note = Face value of the not + Interest on the note = 9000000 +…

Q: In March, paid the entire amount of the note on its March 1 due date, using proceeds from a February…

A: Notes payable = $20,000,000Interest rate = 9% per annum2024 interest (3 months) [Recorded as…

Concept explainers

Conversion Cycle

Conversion cycle is also known as cash cycle or net operating cycle. Conversion cycle refers to how much time a company takes to turn its investments which is done from stock or any other financial resources into cash flows from sales.

Question

While reviewing the March 31, 2020, balance sheet of Business Solutions, Santana Rey notes that
the business has built a large cash balance of $68,057. Its most recent bank money market statement shows
that the funds are earning an annualized return of 0.75%. S. Rey decides to make several investments with
the desire to earn a higher return on the idle cash balance. Accordingly, in April 2020, Business Solutions
makes the following investments in trading securities.
Apr. 16 Purchases Johnson & Johnson bonds for $10,000.
Apr. 30 Purchases Starbucks notes for $4,400.
On June 30, 2020, the fair value of the Johnson & Johnson bonds is $12,000 and the Starbucks notes is
$3,800.
Required
1. Prepare journal entries to record the April purchases of trading securities by Business Solutions.
2. On June 30, 2020, prepare the adjusting entry to record any necessary fair value adjustment to its
portfolio
of trading securities.

Definition Definition Entries made at the end of every accounting period to precisely replicate the expenses and revenue of the current period. This is also known as end of period adjustment. It can also refer to financial reporting that corrects errors made previously in the accounting period. Every adjustment entry affects at least one real account and one nominal account.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step 3

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps with 3 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

While reviewing the March 31, 2022, balance sheet of Business Solutions, Santana Rey notes that the business has built a large cash balance of $68,057. Its most recent bank money market statement shows that the funds are earning an annualized return of 0.75%. S. Rey decides to make several investments with the desire to earn a higher return on the idle cash balance. Accordingly, in April 2022, Business Solutions makes the following investments in trading securities. April 16 Purchases Johnson & Johnson bonds for $10,000. April 30 Purchases Starbucks notes for $4,400. On June 30, 2022, the fair value of the Johnson & Johnson bonds is $12,000 and the Starbucks notes is $3,800. Required:1. Prepare journal entries to record the April purchases of trading securities by Business Solutions.2. On June 30, 2022, prepare the adjusting entry to record any necessary fair value adjustment to its portfolio of trading securities.
Lonergan Company occasionally uses its accounts receivable to obtain immediate cash. At the end of June 2024, the company had accounts receivable of $980,000. Lonergan needs approximately $600,000 to capitalize on a unique investment opportunity. On July 1, 2024, a local bank offers Lonergan the following two alternatives: a. Borrow $600,000, sign a promissory note, and assign the entire receivable balance as collateral. At the end of each month, a remittance will be made to the bank that equals the amount of receivables collected plus 8% interest on the unpaid balance of the note at the beginning of the period. b. Transfer $650,000 of specific receivables to the bank without recourse. The bank will charge a 2% factoring fee on the amount of receivables transferred. The bank will collect the receivables directly from customers. The sale criteria are met. Required: 1. Prepare the journal entries that would be recorded on July 1 for: a. alternative a. b. alternative b. 2. Assuming that…
You are the new accountant for 12th National Bank and are preparing its 2019 statement of cash flows. The bank reports net income of $75,800 on its 2019 income statement. Included in this net income are the following items: $6,700 gain on sale of trading securities, $1,200 unrealized holding gain on trading securities, and $5,100 loss on sale of securities available for sale. Among its 2019 transactions, the bank sold trading securities with a carrying value of $22,900 for $29,600, and purchased trading securities for $65,200. The bank sold securities available for sale with a cost (and carrying value) of $58,700 for $53,600, and purchased securities available for sale for $39,400. It also made routine 90-day loans of $47,500 to customers and collected $20,000 principal on these customer loans. As a result of the preceding information, the bank’s trading securities account increased by $43,500, the securities available for sale account decreased by $19,300, and the loans receivable…
I am trying to get these for a year end (December 31) financial report. What is the Gain on Sale of Investment on the Discount on notes receivable for the following: On August 31, Sold stock in a nonpublic company with a book value of $7,000 and accepted a $8,200 noninterest-bearing note with a discount rate of 9%. The $8,200 payment is due on February 28, 2025. The stock has no ready market value.
Ms. Arzel opened the The Baker's Box with cash investment of P200,000 on July 06, 2020. She opened a Checking Account with initial deposit of P65,000 at BDO. At the end of July 31, the ending balance of the account is P88,945. On Sept. 07, Ms. Arzel received the bank statement for the month of August. Below is a copy of the bank statement and the records of The Baker's Box of the Checking Account No. 88888. BDO Bank Statement Customer: The Baker's Box Address: Dasmarinas Account No.: 88888 Period: August 01 - 31, 2020 Date Check No. Amount Deposit Balance 1-Aug Balance 2-Aug 88,945 88,545 88,200 522 400 The Baker's Box 2-Aug 523 345 Per General Ledger: 3-Aug 5-Aug 6-Aug 2,874 91,074 Cash in Bank, Account No. 88888 526 15,788 7,932 75,286 Beg. balance 3-Aug 10-Aug 528 67,354 88,945 2-Aug 522 400 2-Aug 523 3-Aug 524 3-Aug 525 3-Aug 526 15,788 5-Aug 527 5-Aug 528 5-Aug 529 5-Aug 530 5-Aug 531 14-Aug 532 14-Aug 533 21-Aug 534 21-Aug 535 28-Aug 536 28-Aug 537 28-Aug 538 2,874 345 10-Aug…
Lonergan Company occasionally uses its accounts receivable to obtain immediate cash. At the end of June 2021, the company had accounts receivable of $1,000,000. Lonergan needs approximately $610,000 to capitalize on a unique investment opportunity. On July 1, 2021, a local bank offers Lonergan the following two alternatives: Borrow $610,000, sign a note payable, and assign the entire receivable balance as collateral. At the end of each month, a remittance will be made to the bank that equals the amount of receivables collected plus 12% interest on the unpaid balance of the note at the beginning of the period. Transfer $660,000 of specific receivables to the bank without recourse. The bank will charge a 3% factoring fee on the amount of receivables transferred. The bank will collect the receivables directly from customers. The sale criteria are met. Required:1. Prepare the journal entries that would be recorded on July 1 for: a. alternative a. b. alternative b. 2. Assuming that…
Starlight Enterprises has net credit sales for 2019 in the amount of $2,600,325, beginning accounts receivable balance of $844,260, and an ending accounts receivable balance of $604,930. Compute the accounts receivable turnover ratio and the number of days sales in receivables ratio for 2019 (round answers to two decimal places). What do the outcomes tell a potential investor about Starlight Enterprises if the industry average is 1.5 times and the number of days sales ratio is 175 days?
Zirkle Company borrowed $129,000 from Plains Bank on July 31, Year 1. The note carried a 6% interest rate with a one-year term to maturity Required: a. Show the effects of borrowing the money and the December 31, Year 1 adjustment on the accounting equation. b. What is the amount of interest expense for Year 1? c. Prepare a statement of cash flows for the Zirkle Company for Year 1. Complete this question by entering your answers in the tabs below. Required A Required B Required C Show the effects of borrowing the money and the December 31, Year 1 adjustment on the accounting equation. Note: Enter any decreases to account balances with a minus sign. Leave cells blank if no input is needed. ZIRKLE COMPANY Effect of Adjustment on the Accounting Equation Event Year 1 July 31 December 31 December 31, Year 1 Assets Liabilities Stockholders' Equity Raquinad A Required B > 13
Kindly answer in good accounting form. Preferably in table :)
Abardeen Corporation borrowed $136,000 from the bank on October 1, 2018. The note had an 7 percent annual rate of interest and matured on March 31, 2019. Interest and principal were paid in cash on the maturity date. Required What amount of cash did Abardeen pay for interest in 2018? What amount of interest expense was recognized on the 2018 income statement? What amount of total liabilities was reported on the December 31, 2018, balance sheet? What total amount of cash was paid to the bank on March 31, 2019, for principal and interest? What amount of interest expense was reported on the 2019 income statement?
Kindly answer the question below
Camden Biotechnology began operations in September 2018. The following selected transactions relate to liabilities of the company for September 2018 through March 2019. Camden’s fiscal year ends on December 31. Itsfinancial statements are issued in April.2018a. On September 5, opened checking accounts at Second Commercial Bank and negotiated a short-term line ofcredit of up to $15,000,000 at the bank’s prime rate (10.5% at the time). The company will pay no commitment fees.b. On October 1, borrowed $12 million cash from Second Commercial Bank under the line of credit and issueda five-month promissory note. Interest at the prime rate of 10% was payable at maturity. Management plannedto issue 10-year bonds in February to repay the note.c. Received $2,600 of refundable deposits in December for reusable containers used to transport and storechemical-based products.d. For the September–December period, sales on account totaled $4,100,000. The state sales tax rate is 3% andthe local sales…