Homework Answers
1.
| Date | General Journal | Debit | Credit |
| 12/31/2019 | Fair value adjustment | 1800000 | |
| Unrealized holding gain-OCI | 1800000 | ||
| (To record available for sale debt investments at fair value) |
Working:
| Amortized Cost | Fair Value | Unrealized Gain (Loss) | |
| Circus Company Bond | 3100000 | 3800000 | 700000 |
| Ajax Company Bond | 2600000 | 2400000 | -200000 |
| Miracle Corporate Bond | 6000000 | 5900000 | -100000 |
| Total | 11700000 | 12100000 | 400000 |
| Balance in fair value adjustment (Cr.) | 1400000 | ||
| Adjustment | 1800000 | ||
2. An investment is classified as held to maturity only if the entity has the intention of holding it until maturity and it also has the ability of holding it till maturity. In the given scenario, though Alamo has the intention, it may not have the ability of holding it until maturity in case it decides to expand its operations in Minnesota as tentatively planned. Thus, the debt investment should be classified as an available for sale investment.
Add Answer to:
Problem 2 (8 Points) Alamo Company has the following portfolio of available for sale debt investments:...
Accounting for Debt Securities—Available-for-Sale Hilo Company had the following transactions and adjustments related to a bond...
Accounting for Debt Securities—Available-for-Sale Hilo Company had the following transactions and adjustments related to a bond investment: 2019 Jan. 1 Purchased $800,000 face value of Cynad, Inc.’s 9 percent bonds at 99 plus a brokerage commission of $1,400. The bonds pay interest on June 30 and December 31 and mature in 20 years. Hilo does not expect to sell the bonds in the near future, nor does it intend to hold the bonds to maturity. June 30 Received the semiannual...
At the beginning of 2019, Ace Company had the following portfolio of investments in available-for-sale debt...
At the beginning of 2019, Ace Company had the following
portfolio of investments in available-for-sale debt securities (all
of which were acquired at par value):
Security
Cost
1/1/19 Fair Value
A
$35,000
$44,000
B
53,000
50,000
Totals
$88,000
$94,000
During 2019, the following transactions occurred:
Transactions:
May
3
Purchased C debt securities at their par value for
$50,000.
July
1
Sold all of the A securities for $44,000 plus interest of
$1,000.
Dec.
31
Received interest of $1,000 on the...
At the end of 2018, Terry Company prepared the following schedule of investments in available-for-sale debt...
At the end of 2018, Terry Company prepared the following
schedule of investments in available-for-sale debt securities (all
of which were acquired at par value):
Company
Amortized Cost
12/31/18 Fair Value
Cumulative Change in Fair Value
Morgan Company
$35,000
$34,200
$(800)
Nance Company
60,000
63,200
3,200
Totals
$95,000
$97,400
$2,400
During 2019, the following transactions occurred:
July 1
Purchased Oscar Company debt securities with a par value of
100,000 for $97,000. The securities carry an annual interest rate
of 10%,...
Accounting for Debt Securities–Available-for-Sale Hilyn Company had the following transactions and adjustments related to a bond...
Accounting for Debt Securities–Available-for-Sale Hilyn Company had the following transactions and adjustments related to a bond investment: 2016 Jan. Purchased $800,000 face value of Cynad, Inc.'s 9 percent bonds at 99 plus a brokerage commission of $1,400. The bonds pay interest on June 30 and December 31 and mature in 15 years. Hilyn does 1 not expect to sell the bonds in the near future, nor does it intend to hold the bonds to maturity. June 30 Received the semiannual...
At the beginning of 2019, Ace Company had the following portfolio of investments in available-for-sale debt...
At the beginning of 2019, Ace Company had the following portfolio of investments in available-for-sale debt securities (all of which were acquired at par value): Security Cost 1/1/19 Fair Value A $15,000 $19,000 B 23,000 22,000 Totals $38,000 $41,000 During 2019, the following transactions occurred: Transactions: May 3 Purchased C debt securities at their par value for $45,000. July 1 Sold all of the A securities for $19,000 plus interest of $1,000. Dec. 31 Received interest of $1,000 on the...
Stewart Enterprises has the following investments, all purchased prior to 2018: Bee Company 5% bonds, purchased...
Stewart Enterprises has the following investments, all purchased prior to 2018: Bee Company 5% bonds, purchased at face value, with an amortized cost of $4,000,000, and classified as held to maturity. At December 31, 2018, the Bee investment had a fair value of $3,500,000, and Stewart calculated that $240,000 of the fair value decline is a credit loss and $260,000 is a noncredit loss. At December 31, 2019. the Bee investment had a fair value of $3,700,000, and Stewart calculated...
E17-9 (L01) (Available-for-Sale Debt Securities Entries and Financial Statement Presentation) At December 31, 2017, the available-for-sale...
E17-9 (L01) (Available-for-Sale Debt Securities Entries and Financial Statement Presentation) At December 31, 2017, the available-for-sale debt portfolio for Steffi Graf, Inc. is as follows. Security Cost Fair Value Unrealized Gain (Loss) $17,500 $15,000 152,500) 12,500 14,000 1,500 23,000 25,500 2,500 Total $53,000 $54,500 Previous fair value adjustment balance-Dr. Fair value adjustment--Dr. On January 20, 2018, Steffi Graf, Inc. sold security A for $15,100. The sale proceeds are not of brokerage fees Instructions (a) Prepare the adjusting entry at December...
At December 31, 2020, the available-for-sale debt portfolio for Marigold, Inc. is as follows. Security Cost...
At December 31, 2020, the available-for-sale debt portfolio for Marigold, Inc. is as follows. Security Cost Fair Value $31,500 $27,000 22,500 25,200 41,400 45,900 Total $95,400 $98,100 Previous fair value adjustment balance-Dr. Fair value adjustment-Dr. Unrealized Gain (Loss) $(4,500 ) 2,700 4,500 2,700 720 $1,980 On January 20, 2021, Marigold, Inc. sold security A for $27,180. The sale proceeds are net of brokerage fees. (a) Prepare the adjusting entry at December 31, 2020, to report the portfolio at fair value....
At December 31, 2017, the available-for-sale debt portfolio for Skysong, Inc. is as follows. Unrealized Gain...
At December 31, 2017, the available-for-sale debt portfolio for Skysong, Inc. is as follows. Unrealized Gain (Loss) Security Cost Fair Value $27,000 25,200 45,900 $98,100 $(4,500) 2,700 4,500 $31,500 22,500 41,400 Total $95,400 Previous fair value adjustment balance-Dr. Fair value adjustment-Dr. 2,700 720 $1,980 On January 20, 2018, Skysong, Inc. sold security A for $27,180. The sale proceeds are net of brokerage fees. (a) Your answer is correct. Prepare the adjusting entry at December 31, 2017, to report the portfolio...
At December 31, 2017, the available-for-sale debt portfolio for Shamrock, Inc. is as follows. Security Cost...
At December 31, 2017, the available-for-sale debt portfolio for
Shamrock, Inc. is as follows.
Security
Cost
Fair Value
Unrealized
Gain (Loss)
A
$21,875
$18,750
$(3,125
)
B
15,625
17,500
1,875
C
28,750
31,875
3,125
Total
$66,250
$68,125
1,875
Previous fair value adjustment balance—Dr.
500
Fair value adjustment—Dr.
$1,375
On January 20, 2018, Shamrock, Inc. sold security A for $18,875.
The sale proceeds are net of brokerage fees.
Show the balance sheet presentation of the investment-related
accounts at December 31, 2017
At the beginning of 2019, Ace Company had the following
portfolio of investments in available-for-sale debt securities (all
of which were acquired at par value):
Security
Cost
1/1/19 Fair Value
A
$35,000
$44,000
B
53,000
50,000
Totals
$88,000
$94,000
During 2019, the following transactions occurred:
Transactions:
May
3
Purchased C debt securities at their par value for
$50,000.
July
1
Sold all of the A securities for $44,000 plus interest of
$1,000.
Dec.
31
Received interest of $1,000 on the...
At the end of 2018, Terry Company prepared the following
schedule of investments in available-for-sale debt securities (all
of which were acquired at par value):
Company
Amortized Cost
12/31/18 Fair Value
Cumulative Change in Fair Value
Morgan Company
$35,000
$34,200
$(800)
Nance Company
60,000
63,200
3,200
Totals
$95,000
$97,400
$2,400
During 2019, the following transactions occurred:
July 1
Purchased Oscar Company debt securities with a par value of
100,000 for $97,000. The securities carry an annual interest rate
of 10%,...
Accounting for Debt Securities–Available-for-Sale Hilyn Company had the following transactions and adjustments related to a bond investment: 2016 Jan. Purchased $800,000 face value of Cynad, Inc.'s 9 percent bonds at 99 plus a brokerage commission of $1,400. The bonds pay interest on June 30 and December 31 and mature in 15 years. Hilyn does 1 not expect to sell the bonds in the near future, nor does it intend to hold the bonds to maturity. June 30 Received the semiannual...
Stewart Enterprises has the following investments, all purchased prior to 2018: Bee Company 5% bonds, purchased at face value, with an amortized cost of $4,000,000, and classified as held to maturity. At December 31, 2018, the Bee investment had a fair value of $3,500,000, and Stewart calculated that $240,000 of the fair value decline is a credit loss and $260,000 is a noncredit loss. At December 31, 2019. the Bee investment had a fair value of $3,700,000, and Stewart calculated...
E17-9 (L01) (Available-for-Sale Debt Securities Entries and Financial Statement Presentation) At December 31, 2017, the available-for-sale debt portfolio for Steffi Graf, Inc. is as follows. Security Cost Fair Value Unrealized Gain (Loss) $17,500 $15,000 152,500) 12,500 14,000 1,500 23,000 25,500 2,500 Total $53,000 $54,500 Previous fair value adjustment balance-Dr. Fair value adjustment--Dr. On January 20, 2018, Steffi Graf, Inc. sold security A for $15,100. The sale proceeds are not of brokerage fees Instructions (a) Prepare the adjusting entry at December...
At December 31, 2020, the available-for-sale debt portfolio for Marigold, Inc. is as follows. Security Cost Fair Value $31,500 $27,000 22,500 25,200 41,400 45,900 Total $95,400 $98,100 Previous fair value adjustment balance-Dr. Fair value adjustment-Dr. Unrealized Gain (Loss) $(4,500 ) 2,700 4,500 2,700 720 $1,980 On January 20, 2021, Marigold, Inc. sold security A for $27,180. The sale proceeds are net of brokerage fees. (a) Prepare the adjusting entry at December 31, 2020, to report the portfolio at fair value....
At December 31, 2017, the available-for-sale debt portfolio for Skysong, Inc. is as follows. Unrealized Gain (Loss) Security Cost Fair Value $27,000 25,200 45,900 $98,100 $(4,500) 2,700 4,500 $31,500 22,500 41,400 Total $95,400 Previous fair value adjustment balance-Dr. Fair value adjustment-Dr. 2,700 720 $1,980 On January 20, 2018, Skysong, Inc. sold security A for $27,180. The sale proceeds are net of brokerage fees. (a) Your answer is correct. Prepare the adjusting entry at December 31, 2017, to report the portfolio...
At December 31, 2017, the available-for-sale debt portfolio for
Shamrock, Inc. is as follows.
Security
Cost
Fair Value
Unrealized
Gain (Loss)
A
$21,875
$18,750
$(3,125
)
B
15,625
17,500
1,875
C
28,750
31,875
3,125
Total
$66,250
$68,125
1,875
Previous fair value adjustment balance—Dr.
500
Fair value adjustment—Dr.
$1,375
On January 20, 2018, Shamrock, Inc. sold security A for $18,875.
The sale proceeds are net of brokerage fees.
Show the balance sheet presentation of the investment-related
accounts at December 31, 2017
Most questions answered within 3 hours.
-
Where is the error in this code sequence?
String s1 = "Hello";
String s2 = "ello";...
asked 10 months ago -
Financial data for Joel de Paris, Inc., for last year
follow:
Joel de Paris, Inc.
Balance...
asked 10 months ago -
Consider this reaction:
Al2(SO4)3 (aq)+ BaCl3
(aq) Al2Cl6 (aq)- +
3BaSO4(s) . What is the...
asked 10 months ago -
Suppose that Savneet is considering increasing her
recent random sample from 20 car rentals to 40...
asked 10 months ago -
Trucks arrive at an unloading terminal at an average rate of 120
per hour.
Trucks arrive...
asked 10 months ago -
Why are methanol and ethanol completely soluble in water while
octanol is not very little soluble....
asked 10 months ago -
A facilities manager at a university reads in a research report
that the mean amount of...
asked 10 months ago -
When the CuSO4 is rehydrated by adding water to the anhydrous
compound, is this an endothermic...
asked 10 months ago -
A ray of sunlight is passing from diamond into crown glass; the
angle of incidence is...
asked 10 months ago -
A block of mass 0.249 kg is placed on top of a light, vertical
spring of...
asked 10 months ago -
how do the kidneys compensate in the presences of acidosis
a) trigger hyperventilate
b) reserve acid...
asked 10 months ago -
Question 501 pts
The rental rate of capital to the firm increases. Which of the
following...
asked 10 months ago