Investment : The act of allocating money to buy a monetary asset, in order to generate wealth in the future is referred to as investment. Journal: Journal is the method of recording monetary business transactions in chronological order. It records the debit and credit aspects of each transaction to abide by the double-entry system. Rules of Debit and Credit: Following rules are followed for debiting and crediting different accounts while they occur in business transactions: Debit , all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities. Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses. To Journalize: The investment made by Company FM on January 1, 2018.

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Answer 1

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 12, Problem 12.2P

1.

To determine

Investment: The act of allocating money to buy a monetary asset, in order to generate wealth in the future is referred to as investment.

Journal: Journal is the method of recording monetary business transactions in chronological order. It records the debit and credit aspects of each transaction to abide by the double-entry system.

Rules of Debit and Credit:

Following rules are followed for debiting and crediting different accounts while they occur in business transactions:

Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities.

Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses.

To Journalize: The investment made by Company FM on January 1, 2018.

2.

To determine

To Journalize: The semiannual interest received by Company FM on June 30, 2018.

3.

To determine

To Journalize: The semiannual interest received by Company FM on December 31, 2018.

4.

To determine

To Calculate: The amount of investment to be recorded in the balance sheet of Company FM on December 31, 2018.

5.

To determine

To Explain: The effect of investment by Company FM on December 31, 2018, in the statement of cash flows.

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This problem is a variation of P12–1, modified to categorize the investment as trading securities.]Fuzzy Monkey Technologies, Inc., purchased as a short-term investment $80 million of 8% bonds, datedJanuary 1, on January 1, 2018. Management intends to include the investment in a short-term, active tradingportfolio. For bonds of similar risk and maturity the market yield was 10%. The price paid for the bonds was $66million. Interest is received semiannually on June 30 and December 31. Due to changing market conditions, thefair value of the bonds at December 31, 2018, was $70 million.Required:1. Prepare the journal entry to record Fuzzy Monkey’s investment on January 1, 2018.2. Prepare the journal entry by Fuzzy Monkey to record interest on June 30, 2018 (at the effective rate).3. Prepare the journal entries by Fuzzy Monkey to record interest on December 31, 2018 (at the effective rate).4. At what amount will Fuzzy Monkey report its investment in the December 31, 2018, balance sheet?…

Answer 2

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 12, Problem 12.2P

1.

To determine

Investment: The act of allocating money to buy a monetary asset, in order to generate wealth in the future is referred to as investment.

Journal: Journal is the method of recording monetary business transactions in chronological order. It records the debit and credit aspects of each transaction to abide by the double-entry system.

Rules of Debit and Credit:

Following rules are followed for debiting and crediting different accounts while they occur in business transactions:

Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities.

Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses.

To Journalize: The investment made by Company FM on January 1, 2018.

2.

To determine

To Journalize: The semiannual interest received by Company FM on June 30, 2018.

3.

To determine

To Journalize: The semiannual interest received by Company FM on December 31, 2018.

4.

To determine

To Calculate: The amount of investment to be recorded in the balance sheet of Company FM on December 31, 2018.

5.

To determine

To Explain: The effect of investment by Company FM on December 31, 2018, in the statement of cash flows.

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Answer 3

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 12, Problem 12.2P

1.

To determine

Investment: The act of allocating money to buy a monetary asset, in order to generate wealth in the future is referred to as investment.

Journal: Journal is the method of recording monetary business transactions in chronological order. It records the debit and credit aspects of each transaction to abide by the double-entry system.

Rules of Debit and Credit:

Following rules are followed for debiting and crediting different accounts while they occur in business transactions:

Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities.

Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses.

To Journalize: The investment made by Company FM on January 1, 2018.

2.

To determine

To Journalize: The semiannual interest received by Company FM on June 30, 2018.

3.

To determine

To Journalize: The semiannual interest received by Company FM on December 31, 2018.

4.

To determine

To Calculate: The amount of investment to be recorded in the balance sheet of Company FM on December 31, 2018.

5.

To determine

To Explain: The effect of investment by Company FM on December 31, 2018, in the statement of cash flows.

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Answer 4

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 12, Problem 12.2P

1.

To determine

Investment: The act of allocating money to buy a monetary asset, in order to generate wealth in the future is referred to as investment.

Journal: Journal is the method of recording monetary business transactions in chronological order. It records the debit and credit aspects of each transaction to abide by the double-entry system.

Rules of Debit and Credit:

Following rules are followed for debiting and crediting different accounts while they occur in business transactions:

Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities.

Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses.

To Journalize: The investment made by Company FM on January 1, 2018.

2.

To determine

To Journalize: The semiannual interest received by Company FM on June 30, 2018.

3.

To determine

To Journalize: The semiannual interest received by Company FM on December 31, 2018.

4.

To determine

To Calculate: The amount of investment to be recorded in the balance sheet of Company FM on December 31, 2018.

5.

To determine

To Explain: The effect of investment by Company FM on December 31, 2018, in the statement of cash flows.

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Answer 5

Chapter 12, Problem 12.2P

1.

To determine

Investment: The act of allocating money to buy a monetary asset, in order to generate wealth in the future is referred to as investment.

Journal: Journal is the method of recording monetary business transactions in chronological order. It records the debit and credit aspects of each transaction to abide by the double-entry system.

Rules of Debit and Credit:

Following rules are followed for debiting and crediting different accounts while they occur in business transactions:

Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities.

Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses.

To Journalize: The investment made by Company FM on January 1, 2018.

2.

To determine

To Journalize: The semiannual interest received by Company FM on June 30, 2018.

3.

To determine

To Journalize: The semiannual interest received by Company FM on December 31, 2018.

4.

To determine

To Calculate: The amount of investment to be recorded in the balance sheet of Company FM on December 31, 2018.

5.

To determine

To Explain: The effect of investment by Company FM on December 31, 2018, in the statement of cash flows.

Answer 6

Chapter 12, Problem 12.2P

1.

To determine

Investment: The act of allocating money to buy a monetary asset, in order to generate wealth in the future is referred to as investment.

Journal: Journal is the method of recording monetary business transactions in chronological order. It records the debit and credit aspects of each transaction to abide by the double-entry system.

Rules of Debit and Credit:

Following rules are followed for debiting and crediting different accounts while they occur in business transactions:

Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities.

Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses.

To Journalize: The investment made by Company FM on January 1, 2018.

Answer 7

Chapter 12, Problem 12.2P

1.

To determine

Investment: The act of allocating money to buy a monetary asset, in order to generate wealth in the future is referred to as investment.

Journal: Journal is the method of recording monetary business transactions in chronological order. It records the debit and credit aspects of each transaction to abide by the double-entry system.

Rules of Debit and Credit:

Following rules are followed for debiting and crediting different accounts while they occur in business transactions:

Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities.

Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses.

To Journalize: The investment made by Company FM on January 1, 2018.

Answer 8

2.

To determine

To Journalize: The semiannual interest received by Company FM on June 30, 2018.

Answer 9

2.

To determine

To Journalize: The semiannual interest received by Company FM on June 30, 2018.

Answer 10

3.

To determine

To Journalize: The semiannual interest received by Company FM on December 31, 2018.

Answer 11

3.

To determine

To Journalize: The semiannual interest received by Company FM on December 31, 2018.

Answer 12

4.

To determine

To Calculate: The amount of investment to be recorded in the balance sheet of Company FM on December 31, 2018.

Answer 13

4.

To determine

To Calculate: The amount of investment to be recorded in the balance sheet of Company FM on December 31, 2018.

Answer 14

5.

To determine

To Explain: The effect of investment by Company FM on December 31, 2018, in the statement of cash flows.

Answer 15

5.

To determine

To Explain: The effect of investment by Company FM on December 31, 2018, in the statement of cash flows.

Answer 16

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Answer 17

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Answer 18

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Answer 19

Ch. 12 - All investments in debt securities are classified...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

Solution Summary: The author explains the rules of debiting and crediting different accounts while they occur in business transactions to abide by the double-entry system.

To Journalize: The semiannual interest received by Company FM on June 30, 2018.

To Journalize: The semiannual interest received by Company FM on December 31, 2018.

To Calculate: The amount of investment to be recorded in the balance sheet of Company FM on December 31, 2018.

To Explain: The effect of investment by Company FM on December 31, 2018, in the statement of cash flows.

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Chapter 12 Solutions