Held-to-maturity security : The debt securities which are held by the investor with an intent to hold the investment till its maturity, are referred to as held-to-maturity securities. Journal entry : Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically. Debit and credit rules: Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts. Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts. To journalize : The purchase $240,000,000 of 6% bonds in the books of Corporation M

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Answer 1

Question

Chapter 12, Problem 12.2E

1)

To determine

Held-to-maturity security: The debt securities which are held by the investor with an intent to hold the investment till its maturity, are referred to as held-to-maturity securities.

Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Debit and credit rules:

Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts.

Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.

To journalize: The purchase $240,000,000 of 6% bonds in the books of Corporation M

(2)

To determine

To journalize: The receipt of semiannual interest on December 31, 2016 in the books of Corporation M

(3)

To determine

To indicate: The amount of investment value as on December 31, 2016 in the books of Corporation M

(4)

To determine

To journalize: The sale of bonds on January 2, 2017 in the books of Corporation M

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Michael McDowell Co. establishes a $108 million liability at the end of 2025 for the estimated site-cleanup costs at two of its manufacturing facilities. All related closing costs will be paid and deducted on the tax return in 2026. Also, at the end of 2025, the company has $54 million of temporary differences due to excess depreciation for tax purposes, $7.56 million of which will reverse in 2026. The enacted tax rate for all years is 20%, and the company pays taxes of $34.56 million on $172.80 million of taxable income in 2025. McDowell expects to have taxable income in 2026. Assuming that the only deferred tax account at the beginning of 2025 was a deferred tax liability of $5,400,000, draft the income tax expense portion of the income statement for 2025, beginning with the line "Income before income taxes." (Hint: You must first compute (1) the amount of temporary difference underlying the beginning $5,400,000 deferred tax liability, then (2) the amount of temporary differences…

Answer 2

Question

Chapter 12, Problem 12.2E

1)

To determine

Held-to-maturity security: The debt securities which are held by the investor with an intent to hold the investment till its maturity, are referred to as held-to-maturity securities.

Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Debit and credit rules:

Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts.

Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.

To journalize: The purchase $240,000,000 of 6% bonds in the books of Corporation M

(2)

To determine

To journalize: The receipt of semiannual interest on December 31, 2016 in the books of Corporation M

(3)

To determine

To indicate: The amount of investment value as on December 31, 2016 in the books of Corporation M

(4)

To determine

To journalize: The sale of bonds on January 2, 2017 in the books of Corporation M

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Answer 3

Question

Chapter 12, Problem 12.2E

1)

To determine

Held-to-maturity security: The debt securities which are held by the investor with an intent to hold the investment till its maturity, are referred to as held-to-maturity securities.

Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Debit and credit rules:

Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts.

Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.

To journalize: The purchase $240,000,000 of 6% bonds in the books of Corporation M

(2)

To determine

To journalize: The receipt of semiannual interest on December 31, 2016 in the books of Corporation M

(3)

To determine

To indicate: The amount of investment value as on December 31, 2016 in the books of Corporation M

(4)

To determine

To journalize: The sale of bonds on January 2, 2017 in the books of Corporation M

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Answer 4

Question

Chapter 12, Problem 12.2E

1)

To determine

Held-to-maturity security: The debt securities which are held by the investor with an intent to hold the investment till its maturity, are referred to as held-to-maturity securities.

Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Debit and credit rules:

Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts.

Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.

To journalize: The purchase $240,000,000 of 6% bonds in the books of Corporation M

(2)

To determine

To journalize: The receipt of semiannual interest on December 31, 2016 in the books of Corporation M

(3)

To determine

To indicate: The amount of investment value as on December 31, 2016 in the books of Corporation M

(4)

To determine

To journalize: The sale of bonds on January 2, 2017 in the books of Corporation M

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Answer 5

Chapter 12, Problem 12.2E

1)

To determine

Held-to-maturity security: The debt securities which are held by the investor with an intent to hold the investment till its maturity, are referred to as held-to-maturity securities.

Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Debit and credit rules:

Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts.

Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.

To journalize: The purchase $240,000,000 of 6% bonds in the books of Corporation M

(2)

To determine

To journalize: The receipt of semiannual interest on December 31, 2016 in the books of Corporation M

(3)

To determine

To indicate: The amount of investment value as on December 31, 2016 in the books of Corporation M

(4)

To determine

To journalize: The sale of bonds on January 2, 2017 in the books of Corporation M

Answer 6

Chapter 12, Problem 12.2E

1)

To determine

Held-to-maturity security: The debt securities which are held by the investor with an intent to hold the investment till its maturity, are referred to as held-to-maturity securities.

Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Debit and credit rules:

Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts.

Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.

To journalize: The purchase $240,000,000 of 6% bonds in the books of Corporation M

Answer 7

Chapter 12, Problem 12.2E

1)

To determine

Held-to-maturity security: The debt securities which are held by the investor with an intent to hold the investment till its maturity, are referred to as held-to-maturity securities.

Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Debit and credit rules:

Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts.

Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.

To journalize: The purchase $240,000,000 of 6% bonds in the books of Corporation M

Answer 8

(2)

To determine

To journalize: The receipt of semiannual interest on December 31, 2016 in the books of Corporation M

Answer 9

(2)

To determine

To journalize: The receipt of semiannual interest on December 31, 2016 in the books of Corporation M

Answer 10

(3)

To determine

To indicate: The amount of investment value as on December 31, 2016 in the books of Corporation M

Answer 11

(3)

To determine

To indicate: The amount of investment value as on December 31, 2016 in the books of Corporation M

Answer 12

(4)

To determine

To journalize: The sale of bonds on January 2, 2017 in the books of Corporation M

Answer 13

(4)

To determine

To journalize: The sale of bonds on January 2, 2017 in the books of Corporation M

Answer 14

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Answer 15

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Answer 16

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Answer 17

Ch. 12 - Prob. 12.1Q Ch. 12 - When market rates of interest rise after a...Ch. 12 - Does GAAP distinguish between fair values that are...Ch. 12 - When a debt investment is acquired to be held for...Ch. 12 - Prob. 12.5Q Ch. 12 - What is comprehensive income? Its composition...Ch. 12 - Why are holding gains and losses treated...Ch. 12 - Prob. 12.8Q Ch. 12 - Prob. 12.9Q Ch. 12 - Prob. 12.10Q

To journalize: The receipt of semiannual interest on December 31, 2016 in the books of Corporation M

To indicate: The amount of investment value as on December 31, 2016 in the books of Corporation M

To journalize: The sale of bonds on January 2, 2017 in the books of Corporation M

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Chapter 12 Solutions