Cornerstones of Financial Accounting
4th Edition
ISBN: 9781337690881
Author: Jay Rich, Jeff Jones
Publisher: Cengage Learning
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Chapter A2, Problem 20E
To determine
Concept introduction:
Available for Sale securities: Those debt or equity securities which are to be sold in nearby future are called available for sale securities. It is shown in the current assets of the company
To prepare:
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At December 31, 2022, the trading debt securities for Sheridan, Inc. are as follows.
Security
A
(a)
B
C
Cost
$17,800
12,000
Dec. 31
22,900
$52,700
Fair Value
$16,300
13,600
19,400
$49,300
Prepare the adjusting entry at December 31, 2022, to report the securities at fair value. (List all debit entries before credit er
Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No-
for the account titles and enter O for the amounts.)
Date Account Titles and Explanation
Debit
Credit
Recording Entries for TS—Effective Interest Method
Adjust FVA at Sale and Year-End
On July 1, 2020, West Company purchased for cash, six $10,000 bonds of North Corporation at a market rate of 4%. The bonds pay 5% interest, payable on a semiannual basis each July 1 and January 1, and mature on July 1, 2023. The bonds are classified as trading securities. The annual reporting period ends December 31. Assume the effective interest method of amortization of any discounts or premiums. Ignore income taxes.
Amortization Schedule
Journal Entries in 2020
Journal Entries in 2021
d. Record the receipt of interest on January 1, 2021.
e. Record the sale of all of the bonds on January 2, 2021, for $66,400.
f. Record the adjustment to the Fair Value Adjustment account on December 31, 2021, assuming no additional TS investments.
Note: List multiple debits or credits (when applicable) in alphabetical order.
Note: Round each amount to the nearest whole dollar.
Note: If a journal entry isn't required…
The following information is available for Tamarisk Corporation's available-for-sale debt securities at December 31, 2020.
Security
Cost
Fair Value
X
$40,120
$35,400
Y
28,320
37,760
$68,440
$73,160
Prepare the adjusting entry to record the securities at fair value at December 31, 2020. (Credit account titles are automatically indented
when the amount is entered. Do not indent manually. List debit entry before credit entry.)
Account Titles and Explanation
Debit
Credit
Chapter A2 Solutions
Cornerstones of Financial Accounting
Ch. A2 - How do long-term investments differ from...Ch. A2 - Prob. 2DQCh. A2 - Prob. 3DQCh. A2 - Prob. 4DQCh. A2 - Prob. 5DQCh. A2 - Prob. 6DQCh. A2 - Prob. 7DQCh. A2 - How does the equity method discourage the...Ch. A2 - Prob. 9DQCh. A2 - Prob. 10DQ
Ch. A2 - Prob. 11DQCh. A2 - Prob. 12DQCh. A2 - Prob. 13DQCh. A2 - Prob. 14DQCh. A2 - Prob. 15DQCh. A2 - Prob. 1MCQCh. A2 - Prob. 2MCQCh. A2 - Prob. 3MCQCh. A2 - Prob. 4MCQCh. A2 - Prob. 5MCQCh. A2 - Prob. 6MCQCh. A2 - Prob. 7MCQCh. A2 - Prob. 8MCQCh. A2 - Prob. 9MCQCh. A2 - Prob. 10MCQCh. A2 - Prob. 11MCQCh. A2 - When the market value of a companys...Ch. A2 - Prob. 13MCQCh. A2 - Prob. 14MCQCh. A2 - Prob. 15MCQCh. A2 - Prob. 16MCQCh. A2 - Prob. 17ECh. A2 - Trading Securities Pear Investments began...Ch. A2 - Prob. 19ECh. A2 - Prob. 20ECh. A2 - Adjusting the Allowance to Adjust Trading...Ch. A2 - Prob. 22ECh. A2 - Prob. 23ECh. A2 - Prob. 24ECh. A2 - Prob. 25ECh. A2 - Prob. 26ECh. A2 - Prob. 27ECh. A2 - Prob. 28ECh. A2 - Prob. 29ECh. A2 - Prob. 30E
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