Homework Answers
1. Company is doing investment in securities for the purpose of short term gain. It's short term investment of the company because company has intention to sell in 1 month.
2. 15/12 Investment in shares a/c dr 46000
to Bank 46000
31/12 Investment in shares a/c 23000 (69-46)*1000
to Unrealised gain on investment 23000
3. Balance Sheet
Investment
Short Term Investment 69000
Income Statement
Other Income
Unrealised gain on Investment 23000
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Group B ES-27B. (Learning Objective 1: Apply GAAP for short-term investments) Northern Corporation, the investment banking...
Northern Corporation, the investment banking company, often has extra cash to invest. Suppose Northern buys 800...
Northern Corporation, the investment banking company, often has extra cash to invest. Suppose Northern buys 800 shares of Music, Inc., stock at $46 per share. Assume Northern expects to hold the Music stock for one month and then sell it. The purchase occurs on December 15, 2016. At December 31, the market price of a share of Music stock is $51 per share Requirements 1. What type of investment is this to Northern? Give the reason for your answer 2....
2. Prepare journal entries to record the following transactions involving both the short-term and long-term investments...
2. Prepare journal entries to record the following transactions involving both the short-term and long-term investments of HDX Inc., all of which occurred during calendar year 2019. a. On February 15, paid $100,000 cash to purchase Apex's 90-day short-term notes at par, which are dated February 15 and pay 5% interest (classified as short-term held-to- maturity). O B. On March 22, bought 1,000 shares of Fox Industries common stock (2% of Fox's outstanding stock) at $25 cash per share plus...
1 Fuzzy Monkey Technologies, Inc., purchased as a short-term investment $170 million of 10% bonds, dated...
1
Fuzzy Monkey Technologies, Inc., purchased as a short-term investment $170 million of 10% bonds, dated January 1, on January 1, 2018. Management intends to include the investment in a short-term, active trading portfolio. For bonds of similar risk and maturity the market yield was 12%. The price paid for the bonds was $151 million. Interest is received semiannually on June 30 and December 31. Due to changing market conditions, the fair value of the bonds at December 31, 2018,...
American Surety and Fidelity buys and sells securities expecting to earn profits on short-term differences in...
American Surety and Fidelity buys and sells securities expecting to earn profits on short-term differences in price. For the first 11 months of 2018, gains from selling trading securities totaled $7 million, losses were $11 million, and the company had earned $5 million in investment revenue. The following selected transactions relate to American's trading account and equity securities investment account during December 2018, and the first week of 2019. The company's fiscal year ends on December 31. No trading securities...
16-6. Debt Investment, Equity Investments, K&Z Potato Chip Company, a U.S. GAAP reporter, with the following...
16-6. Debt Investment, Equity Investments, K&Z Potato Chip Company, a U.S. GAAP reporter, with the following information regarding its investments in equity securities during the current Date January 1 (Beginning Balance: No entry required) January 23 February 4 Description K&Z is currently holding 8,500 of Faithful Corporation common shares (publicly traded). The Faithful shares cost $20 per share. There is a debit balance of $17,000 in the fair value adjustment account. K&Z does not have a significant influence over the...
1. Andrews Specialty, Inc., offers financial services through its investment division. Periodically, Andrews buys and sells...
1. Andrews Specialty, Inc., offers financial services through its investment division. Periodically, Andrews buys and sells securities with the intent of earning profits on short- term differences in price. The following selected transactions relate to Andrews's investment activities during the last quarter of 2018 and the beginning of 2019. The only securities held by Andrews at October 1, 2018 were $2,000,000 of 12% bonds of Pearson Corporation that were purchased on June 2, 2018 at face value. The Pearson Corporation...
American Surety and Fidelity buys and sells securities expecting to earn profits on short-term di...
American Surety and Fidelity buys and sells securities expecting to earn profits on short-term differences in price. For the first 11 months of 2018, gains from selling trading securities totaled $4 million, losses were $11 million, and the company had earned $5 million in investment revenue. The following selected transactions relate to American's trading account and equity securities investment account during December 2018, and the first week of 2019. The company's fiscal year ends on December 31. No trading securities...
American Surety and Fidelity buys and sells securities expecting to earn profits on short-term differences in...
American Surety and Fidelity buys and sells securities expecting to earn profits on short-term differences in price. For the first 11 months of 2018, gains from selling trading securities totaled $4 million, losses were $11 million, and the company had earned $5 million in investment revenue. The following selected transactions relate to American's trading account and equity securities investment account during December 2018, and the first week of 2019. The company's fiscal year ends on December 31. No trading securities...
Question 1: Tanner-UNF Corporation acquired as an investment $245 million of 8% bonds, dated July 1,...
Question 1: Tanner-UNF Corporation acquired as an investment $245 million of 8% bonds, dated July 1, on July 1, 2021. Company management is holding the bonds in its trading portfolio. The market interest rate (yield) was 10% for bonds of similar risk and maturity. Tanner-UNF paid $200 million for the bonds. The company will receive interest semiannually on June 30 and December 31. As a result of changing market conditions, the fair value of the bonds at December 31, 2021,...
1. 2. 1. Campus Corporation had the following investment transactions: Jan. 1 Feb. 15 Mar. 31...
1.
2.
1. Campus Corporation had the following investment transactions: Jan. 1 Feb. 15 Mar. 31 June 1 Purchased Apex bonds for $10,000 plus a $500 brokerage fee. This purchase is considered a short-term investment in available-for-sale (AFS) debt securities by Campus Corporation. Purchased 1,000 shares of Eden, Inc. for $35,000 cash. This purchase is considered a long- term stock investment with insignificant influence by Campus Corporation. Received cash dividend of $0.30 per share from Eden, Inc. Purchased 5,000 shares...
Northern Corporation, the investment banking company, often has extra cash to invest. Suppose Northern buys 800 shares of Music, Inc., stock at $46 per share. Assume Northern expects to hold the Music stock for one month and then sell it. The purchase occurs on December 15, 2016. At December 31, the market price of a share of Music stock is $51 per share Requirements 1. What type of investment is this to Northern? Give the reason for your answer 2....
2. Prepare journal entries to record the following transactions involving both the short-term and long-term investments of HDX Inc., all of which occurred during calendar year 2019. a. On February 15, paid $100,000 cash to purchase Apex's 90-day short-term notes at par, which are dated February 15 and pay 5% interest (classified as short-term held-to- maturity). O B. On March 22, bought 1,000 shares of Fox Industries common stock (2% of Fox's outstanding stock) at $25 cash per share plus...
1
Fuzzy Monkey Technologies, Inc., purchased as a short-term investment $170 million of 10% bonds, dated January 1, on January 1, 2018. Management intends to include the investment in a short-term, active trading portfolio. For bonds of similar risk and maturity the market yield was 12%. The price paid for the bonds was $151 million. Interest is received semiannually on June 30 and December 31. Due to changing market conditions, the fair value of the bonds at December 31, 2018,...
16-6. Debt Investment, Equity Investments, K&Z Potato Chip Company, a U.S. GAAP reporter, with the following information regarding its investments in equity securities during the current Date January 1 (Beginning Balance: No entry required) January 23 February 4 Description K&Z is currently holding 8,500 of Faithful Corporation common shares (publicly traded). The Faithful shares cost $20 per share. There is a debit balance of $17,000 in the fair value adjustment account. K&Z does not have a significant influence over the...
1. Andrews Specialty, Inc., offers financial services through its investment division. Periodically, Andrews buys and sells securities with the intent of earning profits on short- term differences in price. The following selected transactions relate to Andrews's investment activities during the last quarter of 2018 and the beginning of 2019. The only securities held by Andrews at October 1, 2018 were $2,000,000 of 12% bonds of Pearson Corporation that were purchased on June 2, 2018 at face value. The Pearson Corporation...
1.
2.
1. Campus Corporation had the following investment transactions: Jan. 1 Feb. 15 Mar. 31 June 1 Purchased Apex bonds for $10,000 plus a $500 brokerage fee. This purchase is considered a short-term investment in available-for-sale (AFS) debt securities by Campus Corporation. Purchased 1,000 shares of Eden, Inc. for $35,000 cash. This purchase is considered a long- term stock investment with insignificant influence by Campus Corporation. Received cash dividend of $0.30 per share from Eden, Inc. Purchased 5,000 shares...
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