Homework Answers
1. Answer: [D] debit to Short-Term Investments for $48,800.
The journal entry to record the initial investment in the U.S. Treasury bill will debit the short-term investment account for $48,800 and credit the cash account for $48,800. Hence, option D. is the correct answer.
2. Answer: [C] cost.
Valuation of held-to-maturity securities does not take into consideration the market or fair value of the securities. These securities thus continue to be valued on the balance sheet at their cost. Hence, option C. is the correct answer.
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1. A short-term investment in a U.S. Treasury bill costs $48,800 and will mature six months...
Annuities and Loans Treasury bills and Treasury notes are an investment security issued by the U.S....
Annuities and Loans Treasury bills and Treasury notes are an investment security issued by the U.S. government. A Treasury bill matures within one year and investors typically roll over the matured Treasury bill and purchase another Treasury bill the same day. Treasury notes have maturities of up to 10 years. You are considering investing $50,000 in a Treasury bill that you will renew every 6 months or invest in a Treasury note that you will hold until maturity. Your investment...
Additional Information: 1. The short-term investments account includes $23,000 in U.S. treasury bills purchased in May....
Additional Information: 1. The short-term investments account includes $23,000 in U.S. treasury bills purchased in May. The bills mature in July, 2021. 2. The accounts recevable account consists of the following: 2. Amounts oved by customers b. Allowance for uncollectible accounta-trade customers c.Nontrade notes receivable (due in three years) d. Interest receivable on notes (due in four months) Total $ 232,000 (18,000) 70,000 6,000 $ 290,000 3. The notes payable account consists of two notes of $55,000 each. One note...
FF&T Corporation is a confectionery wholesaler that frequently buys and sells securities to meet various investment...
FF&T Corporation is a confectionery wholesaler that frequently buys and sells securities to meet various investment objectives. The following selected transactions relate to FF&T’s investment activities during the last two months of 2018. At November 1, FF&T held $48 million of 20-year, 10% bonds of Convenience, Inc., purchased May 1, 2018, at face value. Management has the positive intent and ability to hold the bonds until maturity. FF&T’s fiscal year ends on December 31. Nov. 1 Received semiannual interest of...
FF&T Corporation is a confectionery wholesaler that frequently buys and sells securities to meet various investment...
FF&T Corporation is a confectionery wholesaler that frequently buys and sells securities to meet various investment objectives. The following selected transactions relate to FF&T’s investment activities during the last two months of 2018. At November 1, FF&T held $45 million of 20-year, 12% bonds of Convenience, Inc., purchased May 1, 2018, at face value. Management has the positive intent and ability to hold the bonds until maturity. FF&T’s fiscal year ends on December 31. Nov. 1 Received semiannual interest of...
The following information shows Carperk Company's individual investments in securities during its current year, along with...
The following information shows Carperk Company's individual investments in securities during its current year, along with the December 31 fair values. Investment in Brava Company bonds: $324,250 cost; $352,460 fair value. Carperk intends to hold these bonds until they mature in 5 years. Investment in Baybridge common stock: 29,500 shares; $257,779 cost; $280,206 fair value. Carperk owns 32% of Baybridge's voting stock and has a significant influence over Baybridge. Investment in Duffa bonds: $132,943 cost; $143,313 fair value. This investment...
The following information shows Carperk Company's individual Investments in securities during its current year, along with...
The following information shows Carperk Company's individual Investments in securities during its current year, along with the December 31 fair values a. Investment in Brava Company bonds: $420,500 cost: $457000 fair value Carperk intends to hold these bonds until they mature in 5 years. b. Investment in Baybridge common stock: 29,500 shares; $362,450 cost: $391,375 fair value. Carperk owns 32% of Baybridge's voting stock and has a significant influence over Baybridge. C. Investment in Duffa bonds: $165,500 cost; $178,000 fair...
Required information The following information applies to the questions displayed below Rose Company had no short-term...
Required information The following information applies to the questions displayed below Rose Company had no short-term investments prior to year 2017. It had the following transactions involving short-term investments in available-for-sale securities during 2017 Apr. 16 Purchased 6,000 shares of Gem Co. stock at $23.00 per share plus a $320 brokerage fee May 1 Paid $150,000 to buy 3-month U. S. Treasury bills (debt securities) : $150,000 principal amount, 4% interest, securities mature on July 31. July 7 Purchased 3,000...
1. Andrews Specialty, Inc., offers financial services through its investment division. Periodically, Andrews buys and sells...
1. Andrews Specialty, Inc., offers financial services through its investment division. Periodically, Andrews buys and sells securities with the intent of earning profits on short- term differences in price. The following selected transactions relate to Andrews's investment activities during the last quarter of 2018 and the beginning of 2019. The only securities held by Andrews at October 1, 2018 were $2,000,000 of 12% bonds of Pearson Corporation that were purchased on June 2, 2018 at face value. The Pearson Corporation...
OPTIONS On January 1, 2018, the Cook's Restaurant decides to invest in Lake Myrth bonds. The...
OPTIONS
On January 1, 2018, the Cook's Restaurant decides to invest in Lake Myrth bonds. The bonds mature on December 31, 2023, and pay interest on June 30 and December 31 at 4% annually. The market rate of interest was 4% on January 1, 2018, so the $110,000 maturity value bonds sold for face value. Cook's intends to hold the bonds until December 31, 2023. Requirements 1. Journalize the transactions related to Cook's investment in Lake Myrth bonds during 2018....
American Surety and Fidelity buys and sells securities expecting to earn profits on short-term differences in...
American Surety and Fidelity buys and sells securities expecting to earn profits on short-term differences in price. For the first 11 months of 2012, gains from selling trading securities totaled $8 million, losses were $11 million, and the company had earned $5 million in investment revenue. The following selected transactions relate to American's trading account during December 2012, and the first week of 2013. The company's financial year ends on December 31. No trading securities vwere held by American on...
Annuities and Loans Treasury bills and Treasury notes are an investment security issued by the U.S. government. A Treasury bill matures within one year and investors typically roll over the matured Treasury bill and purchase another Treasury bill the same day. Treasury notes have maturities of up to 10 years. You are considering investing $50,000 in a Treasury bill that you will renew every 6 months or invest in a Treasury note that you will hold until maturity. Your investment...
Additional Information: 1. The short-term investments account includes $23,000 in U.S. treasury bills purchased in May. The bills mature in July, 2021. 2. The accounts recevable account consists of the following: 2. Amounts oved by customers b. Allowance for uncollectible accounta-trade customers c.Nontrade notes receivable (due in three years) d. Interest receivable on notes (due in four months) Total $ 232,000 (18,000) 70,000 6,000 $ 290,000 3. The notes payable account consists of two notes of $55,000 each. One note...
The following information shows Carperk Company's individual Investments in securities during its current year, along with the December 31 fair values a. Investment in Brava Company bonds: $420,500 cost: $457000 fair value Carperk intends to hold these bonds until they mature in 5 years. b. Investment in Baybridge common stock: 29,500 shares; $362,450 cost: $391,375 fair value. Carperk owns 32% of Baybridge's voting stock and has a significant influence over Baybridge. C. Investment in Duffa bonds: $165,500 cost; $178,000 fair...
Required information The following information applies to the questions displayed below Rose Company had no short-term investments prior to year 2017. It had the following transactions involving short-term investments in available-for-sale securities during 2017 Apr. 16 Purchased 6,000 shares of Gem Co. stock at $23.00 per share plus a $320 brokerage fee May 1 Paid $150,000 to buy 3-month U. S. Treasury bills (debt securities) : $150,000 principal amount, 4% interest, securities mature on July 31. July 7 Purchased 3,000...
1. Andrews Specialty, Inc., offers financial services through its investment division. Periodically, Andrews buys and sells securities with the intent of earning profits on short- term differences in price. The following selected transactions relate to Andrews's investment activities during the last quarter of 2018 and the beginning of 2019. The only securities held by Andrews at October 1, 2018 were $2,000,000 of 12% bonds of Pearson Corporation that were purchased on June 2, 2018 at face value. The Pearson Corporation...
OPTIONS
On January 1, 2018, the Cook's Restaurant decides to invest in Lake Myrth bonds. The bonds mature on December 31, 2023, and pay interest on June 30 and December 31 at 4% annually. The market rate of interest was 4% on January 1, 2018, so the $110,000 maturity value bonds sold for face value. Cook's intends to hold the bonds until December 31, 2023. Requirements 1. Journalize the transactions related to Cook's investment in Lake Myrth bonds during 2018....
American Surety and Fidelity buys and sells securities expecting to earn profits on short-term differences in price. For the first 11 months of 2012, gains from selling trading securities totaled $8 million, losses were $11 million, and the company had earned $5 million in investment revenue. The following selected transactions relate to American's trading account during December 2012, and the first week of 2013. The company's financial year ends on December 31. No trading securities vwere held by American on...
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