Financial Accounting (12th Edition) (What's New in Accounting)
12th Edition
ISBN: 9780134725987
Author: C. William Thomas, Wendy M. Tietz, Walter T. Harrison Jr.
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Videos
Question
Chapter E, Problem E.20AE
1.
To determine
To journalize: The transactions of Company S using straight-line method of amortizing the discount on bonds for the year 2018.
2.
To determine
The reporting of transaction related to bonds investment in the
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Hello,
Can you help with the questions attached, thanks much.
Read the following case and then use your knowledge, skills and critical thinking to answer the questions below:
You are hired to work as an accountant at African Company which has an active trading strategy for debt investments. African Company engaged in purchasing and selling several debt investments to
make profits. On December 31, 2018, the company had 3 debt investments as follows:
Egyptian Company 7% Bonds, the amortized cost is $310,000.
Tunisia Company 8% Bonds, the amortized cost is $525,000.
Morocco Company 6% Bonds, the amortized cost is $415,000.
If the market values of Egyptian Company, Tunisia Company, and Morocco Company debt investments on December 31, 2018, were, $304,000, $538,000, $413,000, respectively.
Required 1:
Prepare the debt investments portfolio for African Company on December 31, 2018, and prepare the adjusting entry on the date?
Required 2:
Assume that African Company sold Tunisia Company 8% Bonds on April 1, 2019 for $519,000 at that time the amortized…
Baghiben
Chapter E Solutions
Financial Accounting (12th Edition) (What's New in Accounting)
Ch. E - Prob. 1QCCh. E - Rolling Hills Productions held investments in...Ch. E - Prob. 3QCCh. E - Crandall's investment is in less than 2% of...Ch. E - Dumois Corporation purchased 1,500 shares of...Ch. E - Prob. 6QCCh. E - Use the Dumois Corporation data in question 5....Ch. E - Prob. 8QCCh. E - Prob. 9QCCh. E - Prob. 10QC
Ch. E - Prob. E.1SCh. E - (Learning Objective 2: Account for investments in...Ch. E - Prob. E.3SCh. E - Prob. E.4SCh. E - Prob. E.5SCh. E - Prob. E.6SCh. E - Prob. E.7SCh. E - Prob. E.8SCh. E - Prob. E.9SCh. E - Prob. E.10SCh. E - (Learning Objective 5: Record a held-to-maturity...Ch. E - Prob. E.12SCh. E - (Learning Objective 5: Calculate and record...Ch. E - Prob. E.14SCh. E - Prob. E.15SCh. E - Prob. E.16SCh. E - Prob. E.17AECh. E - (Learning Objective 2: Record transactions for...Ch. E - (Learning Objective 2: Analyze and report...Ch. E - Prob. E.20AECh. E - Prob. E.21AECh. E - Prob. E.22AECh. E - Prob. E.23AECh. E - Prob. E.24BECh. E - Prob. E.25BECh. E - (Learning Objective 2: Analyze and report...Ch. E - (Learning Objective 3: Account for transactions...Ch. E - Prob. E.28BECh. E - Prob. E.29BECh. E - Prob. E.30BECh. E - Prob. E.31QCh. E - Prob. E.32QCh. E - Prob. E.33QCh. E - Prob. E.34QCh. E - Prob. E.35QCh. E - Dividends received on an equity-method investment...Ch. E - Prob. E.37QCh. E - Prob. E.38QCh. E - Prob. E.39APCh. E - (Learning Objectives 2, 3: Analyze and report...Ch. E - (Learning Objectives 2, 3: Analyze and report...Ch. E - Prob. E.42APCh. E - Prob. E.43BPCh. E - LO 2, 3 (Learning Objectives 2, 3: Analyze and...Ch. E - Prob. E.45BPCh. E - Prob. E.46BPCh. E - Prob. E.47DC
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Use the following information on a company's investments in debt securities to answer the following question. The company's accounting year ends December 31. Investment Date of Acquisition 9/20/23 $38,000 Colt Compan y bonds Cost Fair Value Date Sold Selling 12/31/23 Price $37,000 2/10/24 $42,000 Dana Compan y bonds 10/2/23 14,000 14,200 1/17/24 13,000 If the above investments are categorized as available-for-sale securities, what is the net effect on 2024 other comprehensive income? Select one: a. $ 800 increase b. $0 c. $3,800 increase d. $ 800 decreasearrow_forwardExample 2) Fair value through profit or loss: Debt investment ABC Co. had the following transactions pertaining its trading investments: Feb. 1, 2021 Purchased $200,000 of 3-year, 6% bonds at 104. Interest is payable on each August 1 and February 1. Aug. 1, 2021 Received interest on the bonds. Dec. 31, 2021 The fair value of the bonds was 100. Instruction: Record the above transactions, using the fair value through profit or loss model. Also, prepare any required adjusting entry/entries at December 31, 2021. ABC Co. has a December 31 year-end.arrow_forward1. Help me selecting the right answer. Thank youarrow_forward
- Requirement 2. Prepare a partial balance sheet for Thyme's Vince investment as of December 31, 2018. Use the partial balance sheet below to show how to report the investment on Thyme's balance sheet at December 31, 2018. (Use a minus sign or parentheses to enter a loss. If a box is not used in the balance sheet, leave the box empty; do not sect a label or enter a zero.)arrow_forwardThe following is a December 31, 2024, post-closing trial balance for Almway Corporation. Account Title Cash Investment in equity securities Accounts receivable Inventory Prepaid insurance (for the next 9 months) Land Buildings Accumulated depreciation-buildings Equipment Accumulated depreciation-equipment Patent (net) Accounts payable Notes payable Interest payable Bonds Payable Common stock Retained earnings Totals Additional information: Debits $ 81,000 Credits 146,000 78,000 218,000 7,000 126,000 438,000 $ 118,000 128,000 78,000 28,000 111,000 184,000 38,000 258,000 354,000 109,000 $ $ 1,250,000 1,250,000 1. The investment in equity securities account includes an investment in common stock of another corporation of $48,000 which management intends to hold for at least three years. The balance of these investments is intended to be sold in the coming year.arrow_forwardPROBLEM E: You were engaged by SKT Company for the first time on February 15, 2018, to audit their financial statements as of and for the year ended December 31, 2017. In auditing their investment accounts, you decided to review the transactions and entries related to an investment in debt securities. On January 2, 2016, SKT acquired a 5-year 10% bond with a face value of P5,000,000 for P4,800,000. The entity incurred direct costs for P15,500, resulting to a yield rate of 11%. The business model of the entity for investing in debt securities is to collect contractual cash flows in the form of principal and interest on the outstanding principal, and to sell the financial assets. The bonds are quoted at 101 on December 31, 2016; 97 on December 31, 2017; and 99 on December 31, 2018. By the end of 2017, the balances in the statement of financial position of their Financial Asset – FVOCI and the related unrealized holding gain – OCI are P4,850,000 and P50,000, respectively. The entries…arrow_forward
- Accounting Brooks Company purchases debt investments as trading securities at a cost of $66,000 on December 27. This is its first and only purchase of such securities. At December 31, these securities had a fair value of $72,000. Brooks sells a portion of its trading securities (costing $3,000) for $4,000 cash. Analyze each transaction above by showing its effects on the accounting equation-specifically, identify the accounts and amounts (including + or -) for each transaction. Fill in the blanks 1. 1. Assets Debt (+) Investments increase - Trading Cash 2. Gain on sale of debt investments 3. Debt Investments - Trading 3. Cash (-) decrease (+) increase (-) decrease (+) increase Liabilities + Equity 66,000 = 66,000 = 6,000 3,000 4,000 = = = + + + + + (+) increase F 6,000arrow_forwardPlease solve this accounting problem correctly. Fill out every single box with the right informationarrow_forwardRequired information Use the following information for the Exercises below. (Algo) [The following information applies to the questions displayed below.] Brooks Company purchases debt investments as trading securities at a cost of $74,000 on December 27. This is its first and only purchase of such securities. At December 31, these securities had a fair value of $81,000. Exercise 15-2 (Algo) Accounting for debt investments classified as trading LO P1 1. Prepare the December 27 entry for the purchase of debt investments. 2. & 3. Prepare the December 31 year-end fair value adjusting entry for the trading securities' portfolio and the January 3 entry when Brooks sells a portion of its trading securities (costing $37,000) for $38,750 cash. Complete this question by entering your answers in the tabs below. Req 1 Prepare the December 27 entry for the purchase of debt investments. View transaction list Req 2 and 3 Journal entry worksheetarrow_forward
- How much is the cost of investment ?arrow_forwardPlease provide solutions and explanation. Thank you so much. 1. On April 1, 20x1, Ronald Ryan Co. acquired 12%, P4,000,000 bonds dated January 1, 20x1 at 98 including interest. The bonds mature on December 31, 20x3 but pays annual interest at each year-end. How much is the initial carrying amount of the investment? a. 3,920,000 b. 3,800,000 c. 4,000,000 d. 4,120,000 2. On January 1, 20x1, Mitch Co. acquired 12%, P4,000,000 bonds at 98. Commission paid to brokers amounted to P204,000. Principal is due on December 31, 20x4 but interest payments are made annually starting December 31, 20x1. The adjusted effective interest rate on the investment is closest to a. 12% b. 11% c. 10.2650% d. indeterminable 3. Use the following information for the next three questions: On January 1, 20x1, ABC Co. acquired 10%, ₱1,000,000 bonds for ₱827,135. The bonds mature on December 31, 20x3 and pay annual interest every December 31. ABC Co. incurred transaction costs ₱80,000 on the acquisition.…arrow_forwardBrooks Company purchases debt investments as trading securities at a cost of $56,000 on December 27. This is its first and only purchase of such securities. At December 31, these securities had a fair value of $63,000. Exercise 15-3 (Algo) Financial statement impact of trading securities LO P1 Brooks sells a portion of its trading securities (costing $28,000) for $29,750 cash. Analyze each transaction above by showing its effects on the accounting equation-specifically, identify the accounts and amounts (including + or −) for each transaction. 1. 1. 2. 3. 3. Debt Investments - Trading Cash Assets (+) increase (-) decrease (+) increase 56,000 56,000 = = = = = X Answer is not complete. Liabilities + + + + + Retained earnings Equity X (+) increase × 1,750 Xarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
EBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:9781337514835
Author:MOYER
Publisher:CENGAGE LEARNING - CONSIGNMENT
Financial instruments products; Author: fi-compass;https://www.youtube.com/watch?v=gvxozM3TUIg;License: Standard Youtube License