Rogers Corporation carries an account in its general ledger called Investments, which contained the following debits for investment purchases and no credits. Feb. 1, 2020 Jordy Company common stock, $100 par, 200 shares $ 37,400 April 1 U.S. government bonds, 5%, due April 1, 2030, interest payable April 1 and October 1, 100 bonds at $1,000 each 100,000 July 1 Driver Company 6% bonds, par $50,000, dated March 1, 2016, purchased at par plus accrued interest, interest payable annually on March 1, due March 1, 2040 51,000 Instructions a. Prepare entries necessary to classify the amounts into proper accounts, assuming that all the bonds are classified as available-for-sale. b. Prepare the entry to record the accrued interest on December 31, 2020. c. The fair values of the securities on December 31, 2020, were: Jordy Company common stock $ 33,800 (1% of total shares) U.S. government bonds 124,700 Driver Company bonds 58,600 What entry or entries, if any, would you recommend be made? d. The U.S. government bonds were sold on July 1, 2021, for $119,200 plus accrued interest. Give the proper entry. e. Now assume Rogers' investment in Jordy Company represents 30% of Jordy's shares. Prepare the 2020 entries for the investment in Jordy stock. In 2020, Jordy declared and paid dividends of $9,000 (on September 30) and reported net income of $30,000.
Rogers Corporation carries an account in its general ledger called Investments, which contained the following debits for investment purchases and no credits. Feb. 1, 2020 Jordy Company common stock, $100 par, 200 shares $ 37,400 April 1 U.S. government bonds, 5%, due April 1, 2030, interest payable April 1 and October 1, 100 bonds at $1,000 each 100,000 July 1 Driver Company 6% bonds, par $50,000, dated March 1, 2016, purchased at par plus accrued interest, interest payable annually on March 1, due March 1, 2040 51,000 Instructions a. Prepare entries necessary to classify the amounts into proper accounts, assuming that all the bonds are classified as available-for-sale. b. Prepare the entry to record the accrued interest on December 31, 2020. c. The fair values of the securities on December 31, 2020, were: Jordy Company common stock $ 33,800 (1% of total shares) U.S. government bonds 124,700 Driver Company bonds 58,600 What entry or entries, if any, would you recommend be made? d. The U.S. government bonds were sold on July 1, 2021, for $119,200 plus accrued interest. Give the proper entry. e. Now assume Rogers' investment in Jordy Company represents 30% of Jordy's shares. Prepare the 2020 entries for the investment in Jordy stock. In 2020, Jordy declared and paid dividends of $9,000 (on September 30) and reported net income of $30,000.
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 9P
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Question
Rogers Corporation carries an account in its general ledger called Investments, which contained the following debits for investment purchases and no credits.
| Feb. 1, 2020 | Jordy Company common stock, $100 par, 200 shares | $ 37,400 |
| April 1 | U.S. government bonds, 5%, due April 1, 2030, interest payable April 1 and October 1, 100 bonds at $1,000 each | 100,000 |
| July 1 | Driver Company 6% bonds, par $50,000, dated March 1, 2016, purchased at par plus accrued interest, interest payable annually on March 1, due March 1, 2040 | 51,000 |
Instructions
a. Prepare entries necessary to classify the amounts into proper accounts, assuming that all the bonds are classified as available-for-sale.
b. Prepare the entry to record the accrued interest on December 31, 2020.
c. The fair values of the securities on December 31, 2020, were:
| Jordy Company common stock | $ 33,800 (1% of total shares) |
| U.S. government bonds | 124,700 |
| Driver Company bonds | 58,600 |
What entry or entries, if any, would you recommend be made?
d. The U.S. government bonds were sold on July 1, 2021, for $119,200 plus accrued interest. Give the proper entry.
e. Now assume Rogers' investment in Jordy Company represents 30% of Jordy's shares. Prepare the 2020 entries for the investment in Jordy stock. In 2020, Jordy declared and paid dividends of $9,000 (on September 30) and reported net income of $30,000.
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