Explanation Bond investment: Bond investments are debt securities which pay a fixed interest revenue to the investor. 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. (a) Prepare journal entry for purchase of $200,000 6% bonds of Company W at face value. Date Account Titles and Explanations Post. Ref. Debit ($) Credit ($) May 1 Investments–Company W Bonds 200,000 Cash 200,000 (To record purchase of Company W bonds for cash) Table (1) Investments–Company W Bonds is an asset account. Since bonds investments are purchased, asset value increased, and an increase in asset is debited. Cash is an asset account. Since cash is paid, asset account decreased, and a decrease in asset is credited. (b) Prepare journal entry to record the semiannual interest revenue received. Date Account Titles and Explanations Post. Ref. Debit ($) Credit ($) November 1 Cash 6,000 Interest Revenue 6,000 (To record receipt of interest revenue) Table (2) Cash is an asset account. Since cash is received, asset account increased, and an increase in asset is debited. Interest Revenue is a revenue account. Since revenues increase equity, equity value is increased, and an increase in equity is credited. Working Notes: Compute amount of interest received from Company W. Interest received = { Amount of debt investment × Rate of interest × Time period } = $200,000×6% × 6 12 = $6,000 (c) Prepare journal entry for $70,000 bonds of Company W sold at 97%. Date Account Titles and Explanations Post. Ref. Debit ($) Credit ($) November 1 Cash 67,900 Loss on Sale of Investments 2,100 Investments–Company W Bonds 70,000 (To record sale of Company W bonds) Table (3) Cash is an asset account

Cengagenowv2, 1 Term Printed Access Card For Warren/reeve/duchac's Financial Accounting, 15th

15th Edition

ISBN: 9781337272353

Author: WARREN, Carl; Reeve, James M.; Duchac, Jonathan

Publisher: Cengage Learning

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Consolidation

Consolidation in general examination implies an asset oscillating between well-defined methods of trading status. Consolidation is commonly known as market indecisiveness, which completes when the asset's values move forward or backward the trading struc…

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Chapter 15, Problem 1E

To determine

Journalize the bond investment transactions in the books of Company G.

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Chapter 15 Solutions

Cengagenowv2, 1 Term Printed Access Card For Warren/reeve/duchac's Financial Accounting, 15th

Ch. 15 - Why might a business invest cash in temporary...Ch. 15 - What causes a gain or loss on the sale of a bond...Ch. 15 - When is the equity method the appropriate...Ch. 15 - Prob. 4DQ Ch. 15 - Prob. 5DQ Ch. 15 - Prob. 6DQ Ch. 15 - Prob. 7DQ Ch. 15 - Prob. 8DQ Ch. 15 - Prob. 9DQ Ch. 15 - Prob. 10DQ

Ch. 15 - Prob. 1PEA Ch. 15 - Prob. 1PEB Ch. 15 - Prob. 2PEA Ch. 15 - Prob. 2PEB Ch. 15 - Prob. 3PEA Ch. 15 - Prob. 3PEB Ch. 15 - On January 1, Valuation Allowance for Trading...Ch. 15 - On January 1, Valuation Allowance for Trading...Ch. 15 - On January 1, Valuation Allowance for...Ch. 15 - On January 1, Valuation Allowance for...Ch. 15 - On June 30, Setzer Corporation had a market price...Ch. 15 - Prob. 6PEB Ch. 15 - Prob. 1E Ch. 15 - Prob. 2E Ch. 15 - Bocelli Co. purchased 120,000 of 6%, 20-year Sanz...Ch. 15 - Prob. 4E Ch. 15 - Prob. 5E Ch. 15 - On February 22, Stewart Corporation acquired...Ch. 15 - The following equity investment transactions were...Ch. 15 - Yerbury Corp. manufactures construction equipment....Ch. 15 - Seamus Industries Inc. buys and sells investments...Ch. 15 - Prob. 10E Ch. 15 - Prob. 11E Ch. 15 - On January 6, Year 1, Bulldog Co. purchased 34% of...Ch. 15 - Hawkeye Companys balance sheet reported, under the...Ch. 15 - JED Capital Inc. makes investments in trading...Ch. 15 - The investments of Charger Inc. include a single...Ch. 15 - Gruden Bancorp Inc. purchased a portfolio of...Ch. 15 - Last Unguaranteed Financial Inc. purchased the...Ch. 15 - The income statement for Delta-tec Inc. for the...Ch. 15 - Highland Industries Inc. makes investments in...Ch. 15 - The investments of Steelers Inc. include a single...Ch. 15 - Prob. 21E Ch. 15 - Storm, Inc. purchased the following...Ch. 15 - During Year 1, its first year of operations,...Ch. 15 - During Year 2, Copernicus Corporation held a...Ch. 15 - Prob. 25E Ch. 15 - The market price for Microsoft Corporation closed...Ch. 15 - Prob. 27E Ch. 15 - Prob. 28E Ch. 15 - Prob. 29E Ch. 15 - Soto Industries Inc. is an athletic footware...Ch. 15 - Rios Financial Co. is a regional insurance company...Ch. 15 - Forte Inc. produces and sells theater set designs...Ch. 15 - Prob. 4PA Ch. 15 - Rekya Mart Inc. is a general merchandise retail...Ch. 15 - Prob. 2PB Ch. 15 - Glacier Products Inc. is a wholesaler of rock...Ch. 15 - Teasdale Inc. manufactures and sells commercial...Ch. 15 - Selected transactions completed by Equinox...Ch. 15 - Prob. 1CP Ch. 15 - Prob. 2CP Ch. 15 - Berkshire Hathaway, the investment holding company...Ch. 15 - On July 16, 20Y1, Wyatt Corp. purchased 40 acres...Ch. 15 - International Financial Reporting Standard No. 16...

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