Homework Answers
Answer - Debit to debt investments
Th entry to record the amortization of the discount will be debit to debt investments because it is purchased at discount and discount is always amortized on the debit corresponding to the debt investment.
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xl Your answer is incorrect An available-for-sale debt security is purchased at a discount. The entry to record t...
Brief Exercise 116 On April 1, 2018, West Company purchased $397,000 of 6.75% bonds for $412,630...
Brief Exercise 116 On April 1, 2018, West Company purchased $397,000 of 6.75% bonds for $412,630 plus accrued interest as an available-for-sale security. Interest is paid on July 1 and January 1 and the bonds mature on July 1, 2023. Your answer is partially correct. Try again. Prepare the journal entry on April 1, 2018. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account...
Sunland Company purchased, on January 1, 2020, as an available-for-sale security, $70,000 of the 9%, 5-year...
Sunland Company purchased, on January 1, 2020, as an
available-for-sale security, $70,000 of the 9%, 5-year bonds of
Chester Corporation for $64,826, which provides an 11%
return.
Prepare Sunland’s journal entries for (a) the purchase of the
investment, (b) the receipt of annual interest and discount
amortization, and (c) the year-end fair value adjustment. (Assume a
zero balance in the Fair Value Adjustment account.) The bonds have
a year-end fair value of $66,500. (Round answers to 0
decimal places, e.g....
Brief Exercise 17-2 Culver Company purchased, on January 1, 2017, as an available-for-sale security, $74,000 of...
Brief Exercise 17-2 Culver Company purchased, on January 1, 2017, as an available-for-sale security, $74,000 of the 1196, 5-year bonds of Chester Corporation for $68,794, which provides an 13% Prepare Culver's journal entries for (a) the purchase of the investment, (b) the receipt of annual interest and discount amortization, and (c) the year-end fair value adjustment. (Assume a zero balance in the Fair Value Adjustment account.) The bonds have a year-end fair value of $70,300. (Round answers to 0 decimal...
At December 31, 2017, the available-for-sale debt portfolio for Skysong, Inc. is as follows. Unrealized Gain...
At December 31, 2017, the available-for-sale debt portfolio for Skysong, Inc. is as follows. Unrealized Gain (Loss) Security Cost Fair Value $27,000 25,200 45,900 $98,100 $(4,500) 2,700 4,500 $31,500 22,500 41,400 Total $95,400 Previous fair value adjustment balance-Dr. Fair value adjustment-Dr. 2,700 720 $1,980 On January 20, 2018, Skysong, Inc. sold security A for $27,180. The sale proceeds are net of brokerage fees. (a) Your answer is correct. Prepare the adjusting entry at December 31, 2017, to report the portfolio...
Brief Exercise 17-2 Swifty Company purchased, on January 1, 2017, as an available-for-sale security, $87,000 of...
Brief Exercise 17-2 Swifty Company purchased, on January 1, 2017, as an available-for-sale security, $87,000 of the 10%, 5-year bonds of Chester Corporation for $80,728, which provides an 12% return. Prepare Swifty’s journal entries for (a) the purchase of the investment, (b) the receipt of annual interest and discount amortization, and (c) the year-end fair value adjustment. (Assume a zero balance in the Fair Value Adjustment account.) The bonds have a year-end fair value of $82,650. (Round answers to 0...
Accounting for Debt Securities—Available-for-Sale Hilo Company had the following transactions and adjustments related to a bond...
Accounting for Debt Securities—Available-for-Sale Hilo Company had the following transactions and adjustments related to a bond investment: 2019 Jan. 1 Purchased $800,000 face value of Cynad, Inc.’s 9 percent bonds at 99 plus a brokerage commission of $1,400. The bonds pay interest on June 30 and December 31 and mature in 20 years. Hilo does not expect to sell the bonds in the near future, nor does it intend to hold the bonds to maturity. June 30 Received the semiannual...
Your answer is partially correct. Try again. On January 1, 2017, Cheyenne Company purchased 11% bonds,...
Your answer is partially correct. Try again. On January 1, 2017, Cheyenne Company purchased 11% bonds, having a maturity value of $301,000, for $324,415.24. The bonds provide the bondholders with a 9% yield. They are dated January 1, 2017, and mature January 1, 2022, with interest received on January 1 of each year. Cheyenne Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified as available-for-sale category. The fair value of the bonds at December...
Accounting for Debt Securities–Available-for-Sale Hilyn Company had the following transactions and adjustments related to a bond...
Accounting for Debt Securities–Available-for-Sale Hilyn Company had the following transactions and adjustments related to a bond investment: 2016 Jan. Purchased $800,000 face value of Cynad, Inc.'s 9 percent bonds at 99 plus a brokerage commission of $1,400. The bonds pay interest on June 30 and December 31 and mature in 15 years. Hilyn does 1 not expect to sell the bonds in the near future, nor does it intend to hold the bonds to maturity. June 30 Received the semiannual...
HW 17-7-Debt Securities AS CORRECTED Presented below is an amortization schedue related to the Orlando Magic's...
HW 17-7-Debt Securities AS CORRECTED Presented below is an amortization schedue related to the Orlando Magic's 5 year, $200,000 bond with a 5% interest rate and a 5% yield, purchased on December 31, 2018 for $191,575. Bond Discount Carrying Amount Date Cash Received Interest Revenue Amortization of Bond 12/31/2018 191,575 12/31/2019 10,000 11,495 1,495 193,070 12/31/2020 10,000 11,584 1,584 194,654 12/31/2021 10,000 11,679 1,679 196,333 12/31/2022 10,000 11,780 1,780 198,113 12/31/2023 10,000 11,887 1,887 200,000 Instructions (a) Prepare the journal...
On January 1, 2020, Sarasota Inc. had the following balance sheet. Assets Cash Debt investments (available-for-sale)...
On January 1, 2020, Sarasota Inc. had the following balance sheet. Assets Cash Debt investments (available-for-sale) Total SARASOTA INC. BALANCE SHEET AS OF JANUARY 1, 2020 Equity $54,600 Common stock 238,100 Accumulated other comprehensive income $292,700 Total $273,300 19,400 $292,700 The accumulated other comprehensive income related to unrealized holding gains on available-for-sale debt securities. The fair value of Sarasota Incis available-for-sale debt securities at December 31, 2020, was $203,800; its cost was $139,400. No securities were purchased during the year....
Brief Exercise 116 On April 1, 2018, West Company purchased $397,000 of 6.75% bonds for $412,630 plus accrued interest as an available-for-sale security. Interest is paid on July 1 and January 1 and the bonds mature on July 1, 2023. Your answer is partially correct. Try again. Prepare the journal entry on April 1, 2018. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account...
Sunland Company purchased, on January 1, 2020, as an
available-for-sale security, $70,000 of the 9%, 5-year bonds of
Chester Corporation for $64,826, which provides an 11%
return.
Prepare Sunland’s journal entries for (a) the purchase of the
investment, (b) the receipt of annual interest and discount
amortization, and (c) the year-end fair value adjustment. (Assume a
zero balance in the Fair Value Adjustment account.) The bonds have
a year-end fair value of $66,500. (Round answers to 0
decimal places, e.g....
Brief Exercise 17-2 Culver Company purchased, on January 1, 2017, as an available-for-sale security, $74,000 of the 1196, 5-year bonds of Chester Corporation for $68,794, which provides an 13% Prepare Culver's journal entries for (a) the purchase of the investment, (b) the receipt of annual interest and discount amortization, and (c) the year-end fair value adjustment. (Assume a zero balance in the Fair Value Adjustment account.) The bonds have a year-end fair value of $70,300. (Round answers to 0 decimal...
At December 31, 2017, the available-for-sale debt portfolio for Skysong, Inc. is as follows. Unrealized Gain (Loss) Security Cost Fair Value $27,000 25,200 45,900 $98,100 $(4,500) 2,700 4,500 $31,500 22,500 41,400 Total $95,400 Previous fair value adjustment balance-Dr. Fair value adjustment-Dr. 2,700 720 $1,980 On January 20, 2018, Skysong, Inc. sold security A for $27,180. The sale proceeds are net of brokerage fees. (a) Your answer is correct. Prepare the adjusting entry at December 31, 2017, to report the portfolio...
Your answer is partially correct. Try again. On January 1, 2017, Cheyenne Company purchased 11% bonds, having a maturity value of $301,000, for $324,415.24. The bonds provide the bondholders with a 9% yield. They are dated January 1, 2017, and mature January 1, 2022, with interest received on January 1 of each year. Cheyenne Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified as available-for-sale category. The fair value of the bonds at December...
Accounting for Debt Securities–Available-for-Sale Hilyn Company had the following transactions and adjustments related to a bond investment: 2016 Jan. Purchased $800,000 face value of Cynad, Inc.'s 9 percent bonds at 99 plus a brokerage commission of $1,400. The bonds pay interest on June 30 and December 31 and mature in 15 years. Hilyn does 1 not expect to sell the bonds in the near future, nor does it intend to hold the bonds to maturity. June 30 Received the semiannual...
HW 17-7-Debt Securities AS CORRECTED Presented below is an amortization schedue related to the Orlando Magic's 5 year, $200,000 bond with a 5% interest rate and a 5% yield, purchased on December 31, 2018 for $191,575. Bond Discount Carrying Amount Date Cash Received Interest Revenue Amortization of Bond 12/31/2018 191,575 12/31/2019 10,000 11,495 1,495 193,070 12/31/2020 10,000 11,584 1,584 194,654 12/31/2021 10,000 11,679 1,679 196,333 12/31/2022 10,000 11,780 1,780 198,113 12/31/2023 10,000 11,887 1,887 200,000 Instructions (a) Prepare the journal...
On January 1, 2020, Sarasota Inc. had the following balance sheet. Assets Cash Debt investments (available-for-sale) Total SARASOTA INC. BALANCE SHEET AS OF JANUARY 1, 2020 Equity $54,600 Common stock 238,100 Accumulated other comprehensive income $292,700 Total $273,300 19,400 $292,700 The accumulated other comprehensive income related to unrealized holding gains on available-for-sale debt securities. The fair value of Sarasota Incis available-for-sale debt securities at December 31, 2020, was $203,800; its cost was $139,400. No securities were purchased during the year....
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