On January 1, 2018, Hoosier Company purchased $944,000 of 10% bonds at face value. The bond...
On January 1, 2018, Hoosier Company purchased $944,000 of 10%
bonds at face value. The bond market value was $987,000 on December
31, 2018.
Required:
Prepare the appropriate journal entry on December 31, 2018, to
properly value the bonds assuming the bonds are classified as:
(If no entry is required for a transaction/event, select
"No journal entry required" in the first account
field.)
- Trading securities.
- Securities available for sale.
- Held-to-maturity securities.
Homework Answers
| No. | Particulars | Debit | Credit |
| 1 | Bonds | $944,000 | |
| Cash | $944,000 | ||
| (being bonds purchased) | |||
| Fair value adjustment | $43,000 | ||
| Net unrealized holding gain and loss (987000 - 944000) | $43,000 | ||
| (Being unrealized gain recorded) | |||
| 2 | Fair value adjustment | $43,000 | |
| Net unrealized holding gain and loss | $43,000 | ||
| (Being unrealized gain recorded) | |||
| 3 | Investment in bonds | $987,000 | |
| Discount on bond investment | $43,000 | ||
| Cash | $944,000 | ||
| (being bonds purchased on discount) | |||
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