Amalgamated General Corporation is a consulting firm that also offers financial services through its credit division. From time to time the company buys and sells securities. The following selected transactions relate to Amalgamated’s investment activities during the last quarter of 2021 and the first month of 2022. The only securities held by Amalgamated at October 1, 2021 were $40 million of 10% bonds of Kansas Abstractors, Inc., purchased on May 1, 2021 at face value and held in Amalgamated’s trading securities portfolio. The company’s fiscal year ends on December 31. 2021 Oct. 18 Purchased 2 million shares of Millwork Ventures Company common stock for $58 million. Millwork has a total of 34 million shares issued. 31 Received semiannual interest of $1.6 million from the Kansas Abstractors bonds. Nov. 1 Sold the Kansas Abstractors bonds for $36 million because rising interest rates are expected to cause their fair value to continue to fall. No unrealized gains and losses had been recorded on these bonds previously. Dec. 29 Received cash dividends of $9 million from the Millwork Ventures Company shares of common stock. 31 Recorded any necessary adjusting entries relating to the investments. The market price of the Millwork Ventures Company common stock was $24.50 per share. Millwork Ventures Company reported the net income of $2 million. Requirements: Prepare necessary journal entry on Oct. 18, 2021. Prepare necessary journal entry on Oct. 31, 2021. Prepare necessary journal entry on Nov. 1, 2021. Prepare necessary journal entry on Dec. 29, 2021. Prepare necessary journal entry on Dec. 31, 2021.
Amalgamated General Corporation is a consulting firm that also offers financial services through its credit division. From time to time the company buys and sells securities. The following selected transactions relate to Amalgamated’s investment activities during the last quarter of 2021 and the first month of 2022. The only securities held by Amalgamated at October 1, 2021 were $40 million of 10% bonds of Kansas Abstractors, Inc., purchased on May 1, 2021 at face value and held in Amalgamated’s trading securities portfolio. The company’s fiscal year ends on December 31.
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2021 |
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Oct. |
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18 |
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Purchased 2 million shares of Millwork Ventures Company common stock for $58 million. Millwork has a total of 34 million shares issued. |
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31 |
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Received semiannual interest of $1.6 million from the Kansas Abstractors bonds. |
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Nov. |
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1 |
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Sold the Kansas Abstractors bonds for $36 million because rising interest rates are expected to cause their fair value to continue to fall. No unrealized gains and losses had been recorded on these bonds previously. |
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Dec. |
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29 |
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Received cash dividends of $9 million from the Millwork Ventures Company shares of common stock. |
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31 |
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Recorded any necessary |
Requirements:
- Prepare necessary
journal entry on Oct. 18, 2021. - Prepare necessary journal entry on Oct. 31, 2021.
- Prepare necessary journal entry on Nov. 1, 2021.
- Prepare necessary journal entry on Dec. 29, 2021.
- Prepare necessary journal entry on Dec. 31, 2021.
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