Question

Problem 12-9 (Algo) Securities held-to-maturity; trading securities and equity investments [LO12-1, 12-2, 12-3, 12-5] Amalgamated General Corporation is a consulting firm that also offers financial services through its credit division. From time to time the company buys and sells securities. The following selected transactions relate to Amalgamated's investment activities during the last quarter of 2021 and the first month of 2022. The only securities held by Amalgamated at October 1, 2021 were $45 million of 10% bonds of Kansas Abstractors, Inc. purchased on May 1, 2021 at face value and held in Amalgamated's trading securities portfolio. The company's fiscal year ends on December 31 2021 Oct. 18 Purchased 2 million shares of Millwork Ventures Company common stock for $76 million. Millwork has a total of 50 million shares issued. 31 Received semiannual interest of $2.7 million from the Kansas Abstractors bonds. Nov. 1 Purchased 10% bonds of Holistic Entertainment Enterprises at their $18 million face value to be held until they mature in 2031. Semiannual interest is payable April 30 and October 31. 1 Sold the Kansas Abstractors bonds for $41 million because rising interest rates are expected to cause their fair value to continue to fall. unrealized gains and losses had been recorded on these bonds previously Dec. 1 Purchased 12% bonds of Household Plastics Corporation at their $60 million face value, to be held until they mature in 2031. Seelannual interest is payable May 31 and November 30. 20 Purchased U. 5. Treasury bonds for 16.6 million as trading securities, hoping to earn profits on short-term differences in prices. 21 Purchased 4 million shares of HS Corporation's 64 million shares of Cowon stock for $64 million, planning to hold these shares until market conditions encourage their sale. 23 Sold the Treasury bonds for $6.9 million 29 Received cash dividends of $7 million from the Hillwork Ventures Company shares of common stock. 31 Recorded any necessary adjusting entries relating to the investments. The market price of the Millwork Ventures Company Common stock was $34.50 per share and $17.50 per share for the ons Corporation common stock. The fair values of the bond westents were $9. 0 illion for household Plastics Corporation and $16.4 million for Holistic Entertainment Enterprises 2022 Jan. 7 sold the x Corporation common stock shares for so million.

Answer 1

Please hit LIKE button if this helped. For any further explanation, please put your query in comment, will get back to you.					Amalgamated General Corporation
Oct 18	Investment in equity securities	$            76.00
	Cash		$            76.00
Oct 31	Cash	$              2.70
	Interest Revenue		$              2.70
Nov 1	Investment in Holistic Entertainment bonds (HTM)	$            18.00
	Cash		$            18.00
Nov 1	Unrealized holding loss—NI ($45-$41)	$              4.00
	Fair-value adjustment		$              4.00
	Cash	$            41.00
	Fair Value adjustments	$              4.00
	Investment in Kansas Abstractors Bonds (TS)		$            45.00
Dec 1	Investment in Household Plastics bonds (HTM)	$            60.00
	Cash		$            60.00
Dec 20	Investment in U.S. treasury bonds (TS)	$              6.60
	Cash		$              6.60
Dec 21	Investment in NXS common shares	$            64.00
	Cash		$            64.00
Dec 23	Fair-value adjustment ($6.9-$6.6)	$              0.30
	Unrealized holding gain—NI (to balance)		$              0.30
	Cash	$              6.90
	Fair Value adjustments		$              0.30
	Investment in Kansas Abstractors Bonds (TS)		$              6.60
Dec 29	Cash	$              7.00
	Dividend Revenue		$              7.00
Dec 31	Interest receivable - Holistic Entertainment	$              0.30
	($18 million x 10% x 2/12)
	Interest receivable—Household Plastics	$              0.60
	($60 million x 12% x 1/12)
	Interest revenue		$              0.90
	Unrealized holding loss—NI [$76-($34.50*2million shares)	$              7.00
	Fair value adjustment		$              7.00
	Fair value adjustment [($17.50*4 millions hares)-$64]	$              6.00
	Unrealized holding gain—OCI (to balance)		$              6.00
Year 2019
Jan 7	Unrealized holding loss—OCI ($64-$60)+$6	$                  10
	Fair-value adjustment, AFS investment		$                  10
	Fair-value adjustment, AFS investment ($64-$60)	$                    4
	Reclassification adjustment—OCI (to balance)		$                    4
	Cash	$                  60
	Loss—NI	$                    4
	Investment in NXS shares (AFS)		$                  64