Loose Leaf For Fundamental Accounting Principles Format: Loose-leaf
Loose Leaf For Fundamental Accounting Principles Format: Loose-leaf
24th Edition
ISBN: 9781260158557
Author: Wild
Publisher: Mcgraw Hill Publishers
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Chapter 15, Problem 1BPSB

Requirement-1:

To determine

To Prepare:

The journal entries for the transactions and events

Requirement-1:

Expert Solution
Check Mark

Answer to Problem 1BPSB

The journal entries for the transactions and events are as follows:

    Ancore Company
    Journal Entries
    Trading debt securities
    DateAccount TitlesDebitCredit
    Jul. 28
    		Investment in Trading Debt Securities- Target
    		$ 30,000
    Cash
    		$ 30,000
    Aug. 17
    		Investment in Trading Debt Securities- Kroger
    		$ 105,000
    Cash
    		$ 105,000
    Aug. 26
    		Investment in Trading Debt Securities- Ford
    		$ 60,000
    Cash
    		$ 60,000
    Sept. 5
    		Cash
    		$ 6,300
    Gain on sale of Trading Debt Securities
    		$300
    Investment in Trading Debt Securities- Target
    		$ 6,000
    Sept. 8
    		Cash
    		$ 46,200
    Gain on sale of Trading Debt Securities
    		$ 1,200
    Investment in Trading Debt Securities- Kroger
    		$ 45,000
    Oct. 12
    		Investment in Trading Debt Securities- Marshall
    		$ 120,000
    Cash
    		$ 120,000
    Nov. 28
    		Cash
    		$ 54,000
    Loss on sale of Trading Debt Securities
    		$ 6,000
    Investment in Trading Debt Securities- Ford
    		$ 60,000

Explanation of Solution

The journal entries for the transactions and events are explained as follows;

    Ancore Company
    Journal Entries
    Trading debt securities
    DateAccount TitlesDebitCredit
    Jul. 28
    		Investment in Trading Debt Securities- Target
    		$ 30,000
    Cash
    		$ 30,000
    (Being Investment made in Debt Securities)
    Aug. 17
    		Investment in Trading Debt Securities- Kroger
    		$ 105,000
    Cash
    		$ 105,000
    (Being Investment made in Debt Securities)
    Aug. 26
    		Investment in Trading Debt Securities- Ford
    		$ 60,000
    Cash
    		$ 60,000
    (Being Investment made in Debt Securities)
    Sept. 5
    		Cash
    		$ 6,300
    Gain on sale of Trading Debt Securities (6300-6000)
    		$300
    Investment in Trading Debt Securities- Target
    		$ 6,000
    (Being trading investment sold for cash)
    Sept. 8
    		Cash
    		$ 46,200
    Gain on sale of Trading Debt Securities (46200-45000)
    		$ 1,200
    Investment in Trading Debt Securities- Kroger
    		$ 45,000
    (Being trading investment sold for cash)
    Oct. 12
    		Investment in Trading Debt Securities- Marshall
    		$ 120,000
    Cash
    		$ 120,000
    (Being Investment made in Debt Securities)
    Nov. 28
    		Cash
    		$ 54,000
    Loss on sale of Trading Debt Securities (60000-54000)
    		$ 6,000
    Investment in Trading Debt Securities- Ford
    		$ 60,000
    (Being trading investment sold for cash)

Concept Introduction:

Investment in Debt securities:

Debt securities are financing instrument which represents the loan taken from the lender and usually these securities pay defined interest rate on the amount borrowed. The several types of debt instruments are bonds, certificate of deposits, preferred stock, corporate bonds etc. The investment in debt securities is classified under following categories:

  1. Held to maturity: Held to maturity is a type of debt investment that the investor intends to hold until maturity. These securities are recorded at amortized cost.
  2. Trading: Trading securities are purchased by the investor for the purpose to sell within a short-term period to each profit. These securities are recorded at their fair value and any gain or loss is recognized in the income statement for that period.
  3. Available for sale: All the other securities are considered as available for sale and these securities are recorded at their fair value and any gain or loss is recognized unrealized gain or loss until the securities are actually sold.

Requirement-2:

To Prepare:

The Table showing yearend cost and fair values of the trading debt securities

The Table showing yearend cost and fair values of the trading debt securities is as follows:

    Trading SecuritiesCostFair Value
    Target Bonds
    		$ 24,000
    		$ 25,500
    Kroger Bonds
    		$ 60,000
    		$ 66,000
    Marshall Bonds
    		$ 120,000
    		$ 117,000

The Table showing yearend cost and fair values of the trading debt securities is prepared as follows:

    Trading SecuritiesCostFair Value
    Target Bonds
    		$ 24,000
    		$ 25,500
    Kroger Bonds
    		$ 60,000
    		$ 66,000
    Marshall Bonds
    		$ 120,000
    		$ 117,000

Concept Introduction:

Investment in Debt securities:

Debt securities are financing instrument which represents the loan taken from the lender and usually these securities pay defined interest rate on the amount borrowed. The several types of debt instruments are bonds, certificate of deposits, preferred stock, corporate bonds etc. The investment in debt securities is classified under following categories:

  1. Held to maturity: Held to maturity is a type of debt investment that the investor intends to hold until maturity. These securities are recorded at amortized cost.
  2. Trading: Trading securities are purchased by the investor for the purpose to sell within a short-term period to each profit. These securities are recorded at their fair value and any gain or loss is recognized in the income statement for that period.
  3. Available for sale: All the other securities are considered as available for sale and these securities are recorded at their fair value and any gain or loss is recognized unrealized gain or loss until the securities are actually sold.

Requirement-3:

To Prepare:

The yearend adjusting entry to record the fair value adjustment for the trading debt securities

The yearend adjusting entry to record the fair value adjustment for the trading debt securities is as follows:

    Ancore Company
    Journal Entries
    DateAccount TitlesDebitCredit
    Dec. 31
    		Investment in Trading Debt Securities- Target
    		$ 1,500
    Investment in Trading Debt Securities- Kroger
    		$ 6,000
    Unrealized Gain on Trading Debt Securities
    		$ 4,500
    Investment in Trading Debt Securities- Marshall
    		$ 3,000

The yearend adjusting entry to record the fair value adjustment for the trading debt securities is explained as follows:

    Calculation of Fair Value Adjustment :
    Trading SecuritiesCostFair ValueFair Value Adjustment
    ABB-A
    Target Bonds (30000-6000)
    		$ 24,000
    		$ 25,500
    		$ 1,500
    Kroger Bonds (105000-45000)
    		$ 60,000
    		$ 66,000
    		$ 6,000
    Marshall Bonds
    		$ 120,000
    		$ 117,000
    		$(3,000)
    Total Fair Value Adjustment$ 4,500
    Ancore Company
    Journal Entries
    DateAccount TitlesDebitCredit
    Dec. 31
    		Investment in Trading Debt Securities- Target
    		$ 1,500
    Investment in Trading Debt Securities- Kroger
    		$ 6,000
    Unrealized Gain on Trading Debt Securities
    		$ 4,500
    Investment in Trading Debt Securities- Marshall
    		$ 3,000
    (Being fair value adjustment made for trading debt investment)

Requirement-2:

To determine

To Prepare:

The Table showing yearend cost and fair values of the trading debt securities

Requirement-2:

Expert Solution
Check Mark

Answer to Problem 1BPSB

The Table showing yearend cost and fair values of the trading debt securities is as follows:

    Trading SecuritiesCostFair Value
    Target Bonds
    		$ 24,000
    		$ 25,500
    Kroger Bonds
    		$ 60,000
    		$ 66,000
    Marshall Bonds
    		$ 120,000
    		$ 117,000

Explanation of Solution

The Table showing yearend cost and fair values of the trading debt securities is prepared as follows:

    Trading SecuritiesCostFair Value
    Target Bonds
    		$ 24,000
    		$ 25,500
    Kroger Bonds
    		$ 60,000
    		$ 66,000
    Marshall Bonds
    		$ 120,000
    		$ 117,000

Concept Introduction:

Investment in Debt securities:

Debt securities are financing instrument which represents the loan taken from the lender and usually these securities pay defined interest rate on the amount borrowed. The several types of debt instruments are bonds, certificate of deposits, preferred stock, corporate bonds etc. The investment in debt securities is classified under following categories:

  1. Held to maturity: Held to maturity is a type of debt investment that the investor intends to hold until maturity. These securities are recorded at amortized cost.
  2. Trading: Trading securities are purchased by the investor for the purpose to sell within a short-term period to each profit. These securities are recorded at their fair value and any gain or loss is recognized in the income statement for that period.
  3. Available for sale: All the other securities are considered as available for sale and these securities are recorded at their fair value and any gain or loss is recognized unrealized gain or loss until the securities are actually sold.

Requirement-3:

To determine

To Prepare:

The yearend adjusting entry to record the fair value adjustment for the trading debt securities

Requirement-3:

Expert Solution
Check Mark

Answer to Problem 1BPSB

The yearend adjusting entry to record the fair value adjustment for the trading debt securities is as follows:

    Ancore Company
    Journal Entries
    DateAccount TitlesDebitCredit
    Dec. 31
    		Investment in Trading Debt Securities- Target
    		$ 1,500
    Investment in Trading Debt Securities- Kroger
    		$ 6,000
    Unrealized Gain on Trading Debt Securities
    		$ 4,500
    Investment in Trading Debt Securities- Marshall
    		$ 3,000

Explanation of Solution

The yearend adjusting entry to record the fair value adjustment for the trading debt securities is explained as follows:

    Calculation of Fair Value Adjustment :
    Trading SecuritiesCostFair ValueFair Value Adjustment
    ABB-A
    Target Bonds (30000-6000)
    		$ 24,000
    		$ 25,500
    		$ 1,500
    Kroger Bonds (105000-45000)
    		$ 60,000
    		$ 66,000
    		$ 6,000
    Marshall Bonds
    		$ 120,000
    		$ 117,000
    		$(3,000)
    Total Fair Value Adjustment$ 4,500
    Ancore Company
    Journal Entries
    DateAccount TitlesDebitCredit
    Dec. 31
    		Investment in Trading Debt Securities- Target
    		$ 1,500
    Investment in Trading Debt Securities- Kroger
    		$ 6,000
    Unrealized Gain on Trading Debt Securities
    		$ 4,500
    Investment in Trading Debt Securities- Marshall
    		$ 3,000
    (Being fair value adjustment made for trading debt investment)

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Chapter 15 Solutions

Loose Leaf For Fundamental Accounting Principles Format: Loose-leaf

Ch. 15 - Prob. 1DQCh. 15 - Prob. 2DQCh. 15 - Prob. 3DQCh. 15 - Prob. 4DQCh. 15 - Prob. 5DQCh. 15 - Prob. 6DQCh. 15 - Prob. 7DQCh. 15 - Prob. 8DQCh. 15 - Prob. 9DQCh. 15 - Prob. 10DQ
Ch. 15 - Prob. 11DQCh. 15 - Prob. 12DQCh. 15 - Prob. 13DQCh. 15 - Prob. 14DQCh. 15 - Prob. 1QSCh. 15 - Prob. 2QSCh. 15 - Prob. 3QSCh. 15 - Prob. 4QSCh. 15 - QS 15-5 Reporting trading securities on financial...Ch. 15 - Prob. 6QSCh. 15 - Prob. 7QSCh. 15 - Prob. 8QSCh. 15 - Prob. 9QSCh. 15 - Prob. 10QSCh. 15 - Prob. 11QSCh. 15 - Prob. 12QSCh. 15 - Prob. 13QSCh. 15 - Prob. 14QSCh. 15 - Prob. 15QSCh. 15 - Prob. 16QSCh. 15 - Prob. 17QSCh. 15 - Prob. 18QSCh. 15 - Prob. 1ECh. 15 - Prob. 2ECh. 15 - Prob. 3ECh. 15 - Prob. 4ECh. 15 - Prob. 5ECh. 15 - Prob. 6ECh. 15 - Prob. 7ECh. 15 - Prob. 8ECh. 15 - Prob. 9ECh. 15 - Prob. 10ECh. 15 - Prob. 11ECh. 15 - Prob. 12ECh. 15 - Prob. 13ECh. 15 - Prob. 14ECh. 15 - Prob. 15ECh. 15 - Prob. 16ECh. 15 - Prob. 17ECh. 15 - Prob. 1APSACh. 15 - Prob. 2APSACh. 15 - Prob. 3APSACh. 15 - Prob. 4APSACh. 15 - Prob. 5APSACh. 15 - Prob. 6APSACh. 15 - Prob. 1BPSBCh. 15 - Prob. 2BPSBCh. 15 - Prob. 3BPSBCh. 15 - Prob. 4BPSBCh. 15 - Prob. 5BPSBCh. 15 - Prob. 6BPSBCh. 15 - SP 15 While reviewing the March 31, 2020, balance...Ch. 15 - Prob. 1GLPCh. 15 - Prob. 2GLPCh. 15 - Prob. 1AACh. 15 - Prob. 2AACh. 15 - Prob. 3AACh. 15 - Prob. 1BTNCh. 15 - Prob. 2BTNCh. 15 - Prob. 3BTNCh. 15 - Prob. 4BTNCh. 15 - Prob. 5BTNCh. 15 - Prob. 6BTN
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