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P10-22-B

P10-22-B

Intermediate Accounting: Reporting And Analysis
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
Chapter13: Investments And Long-term Receivables
Section: Chapter Questions
Problem 6E: Investment Premium Amortization Schedule On January 1, 2019, Lynch Company acquired 13% bonds with a...
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Question P10-22-B
Problems Group B P10-21B Accounting for debt investments Suppose Hale and Sons purchases $800,000 of 3.5% annual bonds of Tyson Way Corporation at face value on January 1, 2018. These bonds pay interest on June 30 and December 31 each year. They mature on December 31, 2022. Hale and Sons intends to hold the Tyson Way bond investment until maturity. Learning Objective 2 1. Dec. 31 Int. Rev. CR Requirements 1. Journalize Hale and Sons's transactions related to the bonds for 2018. 2. Journalize the entry required on the Tyson Way bonds maturity date. (Assume the last interest payment has already been recorded.) P10-22B Classifying and accounting for debt and equity investments Learning Objec Captain Transfer Corporation generated excess cash and invested in securities as follows: 2. Sep. 16 Gain CR $2,940 2018 Jul. 2 Purchased 4,200 shares of Naradon, Inc. common stock at $13.00 per share. Captain Transfer plans to sell the stock within three months, when the company will need the cash for normal operations. Captain Transfer does not have significant influence over Naradon. Received a cash dividend of $0.40 per share on the Nardon stock investment. Aug. 21 Sep. 16 Sold the Naradon stock for $13.70 per share. Purchased a Purple bond for $40,000 at face value. Captain Transfer classifies the investment as trading and short-term. Oct. 1 Dec. 31 Received a $600 interest payment from Purple. 31 Adjusted the Purple bond to its market value of $44,000. 1. Classify each of the investments made during 2018. (Assume the equity investments represent less than 20% of ownership of outstanding voting stock.) Requirements 3. Prepare T-accounts for the investment assets, and show how to report the investments on Captain Transfer's balance sheet at December 31, 2018. 2. Journalize the 2018 transactions. Explanations are not required. 4. Where is the unrealized holding gain or loss associated with the trading debt investment reported?
Transcribed Image Text:Problems Group B P10-21B Accounting for debt investments Suppose Hale and Sons purchases $800,000 of 3.5% annual bonds of Tyson Way Corporation at face value on January 1, 2018. These bonds pay interest on June 30 and December 31 each year. They mature on December 31, 2022. Hale and Sons intends to hold the Tyson Way bond investment until maturity. Learning Objective 2 1. Dec. 31 Int. Rev. CR Requirements 1. Journalize Hale and Sons's transactions related to the bonds for 2018. 2. Journalize the entry required on the Tyson Way bonds maturity date. (Assume the last interest payment has already been recorded.) P10-22B Classifying and accounting for debt and equity investments Learning Objec Captain Transfer Corporation generated excess cash and invested in securities as follows: 2. Sep. 16 Gain CR $2,940 2018 Jul. 2 Purchased 4,200 shares of Naradon, Inc. common stock at $13.00 per share. Captain Transfer plans to sell the stock within three months, when the company will need the cash for normal operations. Captain Transfer does not have significant influence over Naradon. Received a cash dividend of $0.40 per share on the Nardon stock investment. Aug. 21 Sep. 16 Sold the Naradon stock for $13.70 per share. Purchased a Purple bond for $40,000 at face value. Captain Transfer classifies the investment as trading and short-term. Oct. 1 Dec. 31 Received a $600 interest payment from Purple. 31 Adjusted the Purple bond to its market value of $44,000. 1. Classify each of the investments made during 2018. (Assume the equity investments represent less than 20% of ownership of outstanding voting stock.) Requirements 3. Prepare T-accounts for the investment assets, and show how to report the investments on Captain Transfer's balance sheet at December 31, 2018. 2. Journalize the 2018 transactions. Explanations are not required. 4. Where is the unrealized holding gain or loss associated with the trading debt investment reported?
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