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 $55 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 $67 million. Millwork has a total of 40 million shares issued. | ||
31 | Received semiannual interest of $2.2 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 $48 million because rising interest rates are expected to cause their fair value to continue to fall. No 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. Semiannual interest is payable May 31 and November 30. | ||
20 | Purchased U. S. Treasury bonds for $6.1 million as trading securities, hoping to earn profits on short-term differences in prices. | |||
21 | Purchased 4 million shares of NXS Corporation's 54 million shares of common stock for $54 million, planning to hold these shares until market conditions encourage their sale. | |||
23 | Sold the Treasury bonds for $6.6 million. | |||
29 | Received cash dividends of $9 million from the Millwork 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 $29.00 per share and $15.50 per share for the NXS Corporation common stock. The fair values of the bond investments were $59.3 million for Household Plastics Corporation and $16.4 million for Holistic Entertainment Enterprises. |
2022 | ||||
Jan. | 7 | Sold the NXS Corporation common stock shares for $49 million. |
Required:
Prepare the appropriate journal entry for each transaction or
event. Use one summary entry on December 31 to adjust the portfolio
of equity investments to fair value. (If no entry is
required for a transaction/event, select "No journal entry
required" in the first account field. Do not round intermediate
calculations. Enter your answers in millions rounded to 1 decimal
place, (i.e., 5,500,000 should be entered as 5.5).)
Record the purchase of 2 million shares of Millwork Ventures Company common stock for $67 million.
Record the receipt of semiannual interest of $2.2 million from the Kansas Abstractors bonds.
Record the purchase of 10% bonds of Holistic Entertainment Enterprises at their $18 million face value.
Record the entry to adjust to fair value the investment in Kansas Abstractor bonds on the date of sale.
Record the sale of the investment in Kansas Abstractors bonds.
Record the purchase of 12% bonds of Household Plastics Corporation at their $60 million face value.
Record the purchase of U.S. Treasury bonds for $6.1 million.
Record the purchase of 4 million common shares of NXS Corporation for $54 million.
Record the entry to adjust to fair value the investment in U.S. Treasury bonds on the date of sale.
Record the sale of the Treasury bonds for $6.6 million.
Record the receipt of cash dividends of $9 million from the Millwork Ventures Company common shares.
Record the accrued interest for Holistic Entertainment bonds.
Record the accrued interest for Household Plastics bonds.
Record the entry to adjust the securities to fair value.
Record the entry to adjust to fair value the investment in NXS Corporation common shares on the date of sale.
Record the sale of the NXS Corporation common shares for $49 million.
Date | Account titles | Debit | Credit | ||||||||
2021 | ($ in millions) | ||||||||||
Oct 18. | Investment in Millwork ventures | 67 | |||||||||
Cash | 67 | ||||||||||
(Purchased preferred shares) | |||||||||||
Oct 31. | Cash | 2.2 | |||||||||
Investment revenue | 2.2 | ||||||||||
(Received interest from bonds) | |||||||||||
Nov 1. | Investment in Holistic entertainment | 18 | |||||||||
Cash | 18 | ||||||||||
(Purchased bonds) | |||||||||||
Nov 1. | Cash | 48 | |||||||||
Loss on sale of investments | (55-48) | 7 | |||||||||
Investment in Kansas abstractors bonds | 55 | ||||||||||
(Bonds sold) | |||||||||||
Dec 1. | Investment in Household plastic corporation bonds | 60 | |||||||||
Cash | 60 | ||||||||||
(Purchased bonds) | |||||||||||
Dec 20. | Investment in US treasury bonds | 6.1 | |||||||||
Cash | 6.1 | ||||||||||
(Purchased treasury bonds) | |||||||||||
Dec 21. | Investment in NXS corporation | 54 | |||||||||
Cash | 54 | ||||||||||
(Purchased common shares) | |||||||||||
Dec 23. | Cash | 6.6 | |||||||||
Investment in US treasury bonds | 6.1 | ||||||||||
Gain on sale of investments | (6.6-6.1) | 0.5 | |||||||||
(Bonds sold) | |||||||||||
Dec 29. | Cash | 9 | |||||||||
Investment revenue | 9 | ||||||||||
(Dividend received) | |||||||||||
Dec 31. | Investment revenue receivable-Holistic entertainment | (18*10%*2/12) | 0.3 | ||||||||
Investment revenue receivable-household plastics | (60*12%*1/12) | 0.6 | |||||||||
Investment revenue | 0.9 | ||||||||||
(Interest accrued ) | |||||||||||
Dec 31. | Net unrealized holding gains and losses-OCI | 67-(2*29) | 9 | ||||||||
Fair value adjustment | 9 | ||||||||||
(Millwork ventures preferred shares revalued and loss recorded) | |||||||||||
Dec 31. | Fair value adjustment | (4*15.5)-54 | 8 | ||||||||
Net unrealized holding gains and losses-I/S | 8 | ||||||||||
(NXS corporation common shares revalued and gain recorded) | |||||||||||
Dec 31. | Net unrealized holding gains and losses-I/S | 8 | |||||||||
Investment revenue | (2.2+9+0.9) | 12.1 | |||||||||
Gain on sale of investments | 0.5 | ||||||||||
Loss on sale of investments | 7 | ||||||||||
Income summary | (Balancing figure) | 13.6 | |||||||||
(Closing entry) | |||||||||||
2022 | |||||||||||
Jan 1. | Cash | 49 | |||||||||
Loss on sale of investments | (54-49) | 5 | |||||||||
Investment in NXS corporation | 54 | ||||||||||
(Investment sold) | |||||||||||
Amalgamated General Corporation is a consulting firm that also offers financial services through its credit division....
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 2018 and the first month of 2019. The only securities held by Amalgamated at October 1 were $50 million of 10% bonds of Kansas Abstractors, Inc., purchased on May 1 at face value and held in Amalgamated's trading portfolio. The...
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 2018 and the first month of 2019. The only securities held by Amalgamated at October 1 were $45 million of 10% bonds of Kansas Abstractors, Inc. purchased on May 1 at face value and held in Amalgamated's trading portfolio. The...
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...
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 $50 million of 10% bonds of Kansas Abstractors, Inc., purchased on May 1, 2021 at face value and held in Amalgamated’s trading...
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...
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 $30 million of 10% bonds of Kansas Abstractors, Inc., purchased on May 1, 2021 at face value and held in Amalgamated's trading...
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...
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 $30 million of 10% bonds of Kansas Abstractors, Inc., purchased on May 1, 2021 at face value and held in Amalgamated's trading...
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 $55 million of 10% bonds of Kansas Abstractors, Inc., purchased on May 1, 2021 at face value and held in Amalgamated’s trading...
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 $40 million of 10% bonds of Kansas Abstractors, Inc., purchased on May 1, 2021 at face value and held in Amalgamated's trading...