1. The Janjua Company had the following account balances at 1/1/18:
Common Stock |
$65,000 |
Treasury Stock (at cost) |
13,400 |
Paid-in-Capital in Excess of Par |
82,000 |
Investments in AFS Debt Securities |
40,000 |
FVA (AFS) |
1,500 credit |
Retained Earnings |
22,000 |
On that date, the Accumulated OCI account was at its proper balance.
There were no sales or purchases of Common Stock or Investments during 2018. Prior to any adjusting journal entries related to the investments, 2018 Net Income was $10,300. No other transactions affecting Retained Earnings occurred. Fair Value of the Investments at 12/31/2018 was $40,000.
Required:
2. The following information relates to the HTM debt securities investments of Kiran Company during 2018:
a. February 1: The company purchased 10% bonds of Tempe Co. having a par value of $150,000 at 97 plus accrued interest. Interest is payable on March 1 and September 1. Maturity date is 9/1/19
b. March 1: Semiannual interest is received and amortization is updated.
c. June 1: 9% bonds of Flagstaff were purchased. The bonds had a par value of $80,000 and were purchased at 105 plus accrued interest. Interest dates are Jan 1 and July 1. Maturity date is 1/1/20.
d. July 1: Semiannual interest is received and amortization updated for the Flagstaff bonds.
e. September 1: Semiannual interest is received and amortization updated for the Tempe bonds.
Required:
1.
a) Prepare the 12/31/18 journal entry to adjust the investment to fair value | ||
Accumulated gain/loss (40000+1500-40000) | $ 1,500 | |
Investments | $ 1,500 |
b) Prepare the complete 12/31/18 Equity section of the balance sheet | |
Stockholders’ equity Common stock | $ 65,000 |
Paid in capital in excess of par | $ 82,000 |
Retained earnings | $ 22,000 |
Add: net income | $ 10,300 |
Less: accumulated gain or loss | $ (1,500) |
Treasury stock | $ (13,400) |
Total stockholders’ equity | $ 164,400 |
Note: Guidelines allow us to answer only one question, you can ask the other question separately.
1. The Janjua Company had the following account balances at 1/1/18: Common Stock $65,000 Treasury Stock (at...
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