Question

Brief Exercise 17-2 Swifty Company purchased, on January 1, 2017, as an available-for-sale security, $87,000 of the 10%, 5-year bonds of Chester Corporation for $80,728, which provides an 12% return. Prepare Swifty’s journal entries for (a) the purchase of the investment, (b) the receipt of annual interest and discount amortization, and (c) the year-end fair value adjustment. (Assume a zero balance in the Fair Value Adjustment account.) The bonds have a year-end fair value of $82,650. (Round answers to 0 decimal places, e.g. 1,225. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) No. Account Titles and Explanation Debit Credit (a) enter an account title to record the item under point A enter a debit amount enter a credit amount enter an account title to record the item under point A enter a debit amount enter a credit amount (b) enter an account title to record the item under point B enter a debit amount enter a credit amount enter an account title to record the item under point B enter a debit amount enter a credit amount enter an account title to record the item under point B enter a debit amount enter a credit amount (c) enter an account title to record the item under point C enter a debit amount enter a credit amount enter an account title to record the item under point C enter a debit amount enter a credit amount

Answer 1

B D Α 1 Date 2 a) Particulars Debit investmnt - Available for sale Cash |(To record purchase of investment) Debit ($) Credit ($) 80728 80728 Nm torooo Cash Debt investment - Available for sale Interest revenue (To record revenue received)] 8700 987 L T 9687| 935 12 Fair Value Adjustment (Available-for-sale) Unrealized holding gain or loss 9351

Credit ($) A 1 Date Particulars Debit investmnt - Available for sale Cash |(To record purchase of investment) Debit ($) 80728 =C2 nm + in orooo b) =87000*10% =D8-C6 Cash Debt investment - Available for sale Interest revenue (To record revenue received)] 9687 11 C) Fair Value Adjustment (Available-for-sale) =82650-(80728+987) Unrealized holding gain or loss =C11