Question

Information regarding the investments held at 12/31/19 that particularly concerns Mr. Gordon is as follows: JOURNAL ENTRIES Please! On January 1, 2019, B&L, Inc. purchased, at face value, $20 million of 10 year, 10% bonds of Techo, Inc. Interest is paid semi-annually on June 30th and December 31. Management has the ability and plans to hold these bonds until they mature. On January 1, 2019, B&L, Inc. purchased, at face value, $25 million of 10 year, 10% bonds of Medex. Interest is paid semi-annually on June 30th and December 31st. B&L intends to sell these bonds within the next 3 years. On December 15, 2019, B&L, Inc. purchased 1 million shares of Cycam common stock at a cost of $25,000,000. B&L, Inc. holds this investment in its trading portfolio. Management plans to sell this investment during the first week of January 2020. The year-end market price of the Cycam common stock was $27 per share. The fair value of the Techo bond investment was $16 million. The fair value of the Medex bond investment was $25.5 million.

Answer 1

Date Credit amount Particulars 1/1/2019 Investment in bonds of(Techo Inc) To cash a/c Debit amount $20,000,000 $20,000,000 $25,000,000 1/1/2019 Investment in bonds of(Medex) To cash a/c $25,000,000 $2,250,000 6/30/2019 Cash a/c To interest Income (Interest on Techo Inc bonds) $2,250,000 $25,000,000 12/15/2019 Investment in Cycam Securities To cash a/c $25,000,000 $2,250,000 12/31/2019 Cash a/c To interest Income $2,250,000 $4,000,000 12/31/2019 unreaslised loss on bonds/securties To Investment in bonds of(Techo Inc) $4,000,000 $500,000 12/31/2019 Investment in bonds of(Medex) To unreaslised gain on bonds/securties $500,000

$2,000,000 12/31/2019 Investment in Cycam Securities To unreaslised gain on bonds/securties $2,000,000