Akers Company invests its excess cash in marketable securities. At the beginning of 2019, it had the following portfolio of investments in trading debt securities: Security Par Value Amortized Cost 12/31/18 Fair Value Ivan Company 5% bonds, maturing on Dec. 31, 2028 $10,000 $8,400 $9,400 Taylor Company 6% bonds, maturing on Dec. 31, 2023 $40,000 $43,200 $41,800 Totals $51,600 $51,200 During 2019, the following transactions occurred: Mar. 31 Purchased Hill Company 8% bonds with a face value of $20,000 for $20,000 plus accrued interest; interest is payable on the bonds each June 30 and December 31. Mar. 31 Sold the Taylor Company investment for $42,000 plus accrued interest. The Taylor bonds pay interest on December 31 of each year. June 30 Received the semiannual interest on the Hill Company bonds. Dec. 31 Received the annual interest on the Ivan Company bonds and the semiannual interest on the Hill Company bonds. The December 31 closing market prices were as follows: Ivan Company bonds, $9,000; and Hill Company 8% bonds $20,100. Akers uses the straight-line method to amortize any discounts or premiums. Required: 1. Prepare journal entries to record the preceding information. 2. Show what is reported on Akers’s 2019 income statement. 3. Assuming the investment in Ivan Company bonds is considered to be a current asset and the investment in Hill Company bonds is considered to be a noncurrent asset, show how all the items are reported on Akers’s December 31, 2019, balance sheet. X Chart of Accounts CHART OF ACCOUNTS Akers Company General Ledger ASSETS 111 Cash 113 Investment in Trading Securities 121 Accounts Receivable 127 Interest Receivable 141 Inventory 152 Prepaid Insurance 181 Equipment 189 Accumulated Depreciation LIABILITIES 211 Accounts Payable 231 Salaries Payable 250 Unearned Revenue 261 Income Taxes Payable EQUITY 311 Common Stock 331 Retained Earnings REVENUE 411 Sales Revenue 431 Interest Income 441 Gain on Sale of Trading Securities EXPENSES
Akers Company invests its excess cash in marketable securities. At the beginning of 2019, it had the following portfolio of investments in trading debt securities: Security Par Value Amortized Cost 12/31/18 Fair Value Ivan Company 5% bonds, maturing on Dec. 31, 2028 $10,000 $8,400 $9,400 Taylor Company 6% bonds, maturing on Dec. 31, 2023 $40,000 $43,200 $41,800 Totals $51,600 $51,200 During 2019, the following transactions occurred: Mar. 31 Purchased Hill Company 8% bonds with a face value of $20,000 for $20,000 plus accrued interest; interest is payable on the bonds each June 30 and December 31. Mar. 31 Sold the Taylor Company investment for $42,000 plus accrued interest. The Taylor bonds pay interest on December 31 of each year. June 30 Received the semiannual interest on the Hill Company bonds. Dec. 31 Received the annual interest on the Ivan Company bonds and the semiannual interest on the Hill Company bonds. The December 31 closing market prices were as follows: Ivan Company bonds, $9,000; and Hill Company 8% bonds $20,100. Akers uses the straight-line method to amortize any discounts or premiums. Required: 1. Prepare journal entries to record the preceding information. 2. Show what is reported on Akers’s 2019 income statement. 3. Assuming the investment in Ivan Company bonds is considered to be a current asset and the investment in Hill Company bonds is considered to be a noncurrent asset, show how all the items are reported on Akers’s December 31, 2019, balance sheet. X Chart of Accounts CHART OF ACCOUNTS Akers Company General Ledger ASSETS 111 Cash 113 Investment in Trading Securities 121 Accounts Receivable 127 Interest Receivable 141 Inventory 152 Prepaid Insurance 181 Equipment 189 Accumulated Depreciation LIABILITIES 211 Accounts Payable 231 Salaries Payable 250 Unearned Revenue 261 Income Taxes Payable EQUITY 311 Common Stock 331 Retained Earnings REVENUE 411 Sales Revenue 431 Interest Income 441 Gain on Sale of Trading Securities EXPENSES
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter16: Retained Earnings And Earnings Per Share
Section: Chapter Questions
Problem 21E: Mills Company had five convertible securities outstanding during all of 2019. It paid the...
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Akers Company invests its excess cash in marketable securities. At the beginning of 2019, it had the following portfolio of investments in trading debt securities:
Security | Par Value | Amortized Cost | 12/31/18 Fair Value |
Ivan Company 5% bonds, maturing on Dec. 31, 2028 | $10,000 | $8,400 | $9,400 |
Taylor Company 6% bonds, maturing on Dec. 31, 2023 | $40,000 | $43,200 | $41,800 |
Totals | $51,600 | $51,200 |
During 2019, the following transactions occurred:
Mar. 31 | Purchased Hill Company 8% bonds with a face value of $20,000 for $20,000 plus accrued interest; interest is payable on the bonds each June 30 and December 31. |
Mar. 31 | Sold the Taylor Company investment for $42,000 plus accrued interest. The Taylor bonds pay interest on December 31 of each year. |
June 30 | Received the semiannual interest on the Hill Company bonds. |
Dec. 31 | Received the annual interest on the Ivan Company bonds and the semiannual interest on the Hill Company bonds. |
The December 31 closing market prices were as follows: Ivan Company bonds, $9,000; and Hill Company 8% bonds $20,100. Akers uses the straight-line method to amortize any discounts or premiums.
Required:
1. | Prepare |
2. | Show what is reported on Akers’s 2019 income statement. |
3. | Assuming the investment in Ivan Company bonds is considered to be a current asset and the investment in Hill Company bonds is considered to be a noncurrent asset, show how all the items are reported on Akers’s December 31, 2019, |
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