INTERM.ACCT.:REPORTING...-CENGAGENOWV2
3rd Edition
ISBN: 9781337909358
Author: WAHLEN
Publisher: CENGAGE L
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Textbook Question
Chapter 21, Problem 15E
Investments On October 4, 2019, Collins Company purchased 100 bonds of Steph Company for $6,400 as a short-term investment in securities classified as available for sale. On December 31, 2019, the bonds had a fair value of $6,300, and on February 8, 2020, Collins sold the bonds for $6,700.
Required:
In
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Instructions
Chart of Accounts
On February 1, 2020, Aggie Corporation sold its investment in Smith Corporation bonds for $12,500. The bonds have a face
CHART OF ACCOUNTS
value of $12,000 and a stated interest rate of 10%. The market value of the bonds on December 31, 2019 was $12,300.
Aggie Corporation
Required:
General Ledger
Prepare the journal entries to record the sale of the bonds and the adjustments of the unrealized gain or loss.
ASSETS
REVENUE
111 Cash
411 Sales Revenue
113 Investment in Trading Securities
431 Interest Income
114 Investment in Available-for-Sale Securities
441 Gain on Sale of Available-for-Sale
General Journal
117 Interest Receivable
Securities
119 Allowance for Change in Fair Value of Investment
121 Accounts Receivable
EXPENSES
Prepare the journal entries to record the sale of the bonds and the adjustments of the unrealized gain or loss on February 1, 2020.
500 Cost of Goods Sold
141 Inventory
152 Prepaid Insurance
511 Insurance Expense
General Journal…
On 1/1/2019 BY company purchased
4000 bonds of Arab Bank the par
value per bonds OMR45, bonds
bearing interest 12% is payable each
July. 1 & Dec 31. The bonds mature
Dec. 2019. On 31/12/2019, the
company sold the bonds at OMR
152200. On 31/12/2019 the
company should record cash:
Select one:
a. OMR152000
b. OMR163000
c. OMR180000
O d. None of the options
Accounting for debt investments
On February 1, 2018, Bell Co. decides to invest excess cash of $16,800 by purchasing a Grant, Inc. bond at face value. At year-end, December 31, 2018, the fair value of the Grant bond was $19,600. The investment is categorized as a trading debt investment.
Requirements
Journalize the transactions for Bell’s investment in Grant, Inc. for 2018.
In what category and at what value would Bell report the asset on the December 31, 2018, balance sheet? In what account would the market price change in Grant’s bond be reported, if at all?
What was the net effect of the investment on Bell’s net income for the year ended December 31, 2018?
Chapter 21 Solutions
INTERM.ACCT.:REPORTING...-CENGAGENOWV2
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