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. To journalize : The bond investment transaction for purchase of $150,000 8% bonds of Corporation J at face value, on October 1, 20Y2

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Answer 1

Question

Chapter D, Problem D.5EX

(a)

To determine

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.

To journalize: The bond investment transaction for purchase of $150,000 8% bonds of Corporation J at face value, on October 1, 20Y2

(b)

To determine

To journalize: The bond investment transaction for accrued interest, on December 31, 201Y2

(c)

To determine

To journalize: The bond investment transaction for accrued interest, on December 31, 201Y2

(d)

To determine

To journalize: The bond investment transaction for $50,000 bonds sold at 102%, on April 1, 20Y3

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owe Tool and Die (RTD) produces metal fittings as a supplier to various manufacturing firms in the area. The following is the forecasted income statement for the next quarter, which is the typical planning horizon used at RTD. RTD expects to sell 64,000 units during the quarter. RTD carries no inventories. Amount Per Unit Sales revenue $ 2,028,800 $ 31.70 Costs of fitting produced 1,523,200 23.80 Gross profit $ 505,600 $ 7.90 Administrative costs 355,200 5.55 Operating profit $ 150,400 $ 2.35

The audited accounts of Lindsay Co. for year-end August 31, 2014 show a profit of $3,115,000 after charging the following: Depreciation 430,000 Rent 175,000 Legal fees 1,350,000 Audit fees 88,000 Donations 119,000 Bad debts 242,000 Foreign Travel 395,750 Interest payments 62,375 Other Information: a. Legal fees are as follows: Expenses in respect of recovery of debts, $585,000 Expenses related to the increase private share capital, $765,000 b. Lindsay Co. donated $65,500 to UTECH University and $53,500 to HELP, a private charity registered under the Charities Act. c. Bad debts are as follows: • A loan of $76,130 to Derek Stan who failed to repayit. • $63,017, owed by Simplicity Ltd. which was declared bankrupt. • The balance is a percentage of receivables at year end which is deemed to be bad. d. Foreign travel expense included $268,210 for a vacation package for the marketing manager’s and his family plane…

Answer 2

Question

Chapter D, Problem D.5EX

(a)

To determine

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.

To journalize: The bond investment transaction for purchase of $150,000 8% bonds of Corporation J at face value, on October 1, 20Y2

(b)

To determine

To journalize: The bond investment transaction for accrued interest, on December 31, 201Y2

(c)

To determine

To journalize: The bond investment transaction for accrued interest, on December 31, 201Y2

(d)

To determine

To journalize: The bond investment transaction for $50,000 bonds sold at 102%, on April 1, 20Y3

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Answer 3

Question

Chapter D, Problem D.5EX

(a)

To determine

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.

To journalize: The bond investment transaction for purchase of $150,000 8% bonds of Corporation J at face value, on October 1, 20Y2

(b)

To determine

To journalize: The bond investment transaction for accrued interest, on December 31, 201Y2

(c)

To determine

To journalize: The bond investment transaction for accrued interest, on December 31, 201Y2

(d)

To determine

To journalize: The bond investment transaction for $50,000 bonds sold at 102%, on April 1, 20Y3

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Answer 4

Question

Chapter D, Problem D.5EX

(a)

To determine

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.

To journalize: The bond investment transaction for purchase of $150,000 8% bonds of Corporation J at face value, on October 1, 20Y2

(b)

To determine

To journalize: The bond investment transaction for accrued interest, on December 31, 201Y2

(c)

To determine

To journalize: The bond investment transaction for accrued interest, on December 31, 201Y2

(d)

To determine

To journalize: The bond investment transaction for $50,000 bonds sold at 102%, on April 1, 20Y3

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Answer 5

Chapter D, Problem D.5EX

(a)

To determine

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.

To journalize: The bond investment transaction for purchase of $150,000 8% bonds of Corporation J at face value, on October 1, 20Y2

(b)

To determine

To journalize: The bond investment transaction for accrued interest, on December 31, 201Y2

(c)

To determine

To journalize: The bond investment transaction for accrued interest, on December 31, 201Y2

(d)

To determine

To journalize: The bond investment transaction for $50,000 bonds sold at 102%, on April 1, 20Y3

Answer 6

Chapter D, Problem D.5EX

(a)

To determine

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.

To journalize: The bond investment transaction for purchase of $150,000 8% bonds of Corporation J at face value, on October 1, 20Y2

Answer 7

Chapter D, Problem D.5EX

(a)

To determine

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.

To journalize: The bond investment transaction for purchase of $150,000 8% bonds of Corporation J at face value, on October 1, 20Y2

Answer 8

(b)

To determine

To journalize: The bond investment transaction for accrued interest, on December 31, 201Y2

Answer 9

(b)

To determine

To journalize: The bond investment transaction for accrued interest, on December 31, 201Y2

Answer 10

(c)

To determine

To journalize: The bond investment transaction for accrued interest, on December 31, 201Y2

Answer 11

(c)

To determine

To journalize: The bond investment transaction for accrued interest, on December 31, 201Y2

Answer 12

(d)

To determine

To journalize: The bond investment transaction for $50,000 bonds sold at 102%, on April 1, 20Y3

Answer 13

(d)

To determine

To journalize: The bond investment transaction for $50,000 bonds sold at 102%, on April 1, 20Y3

Answer 14

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Answer 15

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Answer 16

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Answer 17

Ch. D - Prob. D.1EX Ch. D - Entries for stock investments, dividends, and sale...Ch. D - Bond investment transactions Starks Products uses...Ch. D - Prob. D.4EX Ch. D - Prob. D.5EX Ch. D - Prob. D.6EX Ch. D - Prob. D.7EX Ch. D - Valuing trading securities at fair value On...Ch. D - Fair value journal entries, trading investments...Ch. D - Fair value journal entries, trading investments...

Solution Summary: The author explains that bond investments are debt securities which pay fixed interest revenue to the investor. Journal entry is a set of economic events which can be measured in monetary terms.

Concept explainers

To journalize: The bond investment transaction for accrued interest, on December 31, 201Y2

To journalize: The bond investment transaction for accrued interest, on December 31, 201Y2

To journalize: The bond investment transaction for $50,000 bonds sold at 102%, on April 1, 20Y3

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Chapter D Solutions