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Dicker Furriers purchased 1,000 bonds of Loose Corporation on January 10, 2020, for $810 per bond and classified the investme

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Answer #1

Answer:-

Option B is correct answer i.e Investment in Loose bonds -$130,000

& Income statement loss on Investment - $310,000

Explanation :-

Dicker's Investment in Loose stock December 31, 2021 is calculated below:

= No.of Bond × Bond price

Dicker Furriers purchased 1,000 bonds of Loose Corporation.So No.of bonds = 1,000

On December31, 2021, market value of Bonds had declined to $130 per bond.

Investment in Loose Bond = 1,000 bonds × $130 per share bond

Investment in Loose bonds = $130,000

December 31,2021 - Credit loss $310 per bond

Credit Loss = 1000 Shares × $310 per bond

Credit Loss = $310,000 ( Income statement loss on Investment)

Journal entry :- (Income statement expenses)

Credit Loss Expenses A/c Dr. $310,000

To Allowance for credit Loss A/c $310,000

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