You are in charge of auditing PLM (PopoyLangMalakas) Company's investment accounts for the year ended December 31, 2021, which was incorporated last March 3, 2020. During the course of the audit, you have obtained the balances and the related journal entries of its investment related transactions and have revealed the following information: Investment in Bonds P101,258 Investment in Stocks 62,400 Total P163,658 Journal Entries: Investment in bonds - 10% treasury bonds from the Banko Sentral ng Pilipinas. The investment is in a portfolio which has the objective of collecting contractual cash flows. Date Account Debit Credit July 1, 2020 Investment in BSP bonds 105, 242 Cash 105, 242 To record the acquisition of P100,000 face value BSP bonds December 31, 2020 Unrealized Gain / (Loss) on market changes 2,242 Investment in BSP bonds 2,242 To record the market value adjustment for 2020 January 1, 2021 Cash 5,000 Interest revenue 5,000 To record interest for 6 months July 1, 2021 Cash 5,000 Interest revenue 5,000 To record interest for 6 months December 31, 2021 Unrealized Gain / (Loss) on market changes 1,742 Investment in BSP bonds 1,742 To record the market value adjustment for 2021 Audit Notes: The market rate for similar bonds at date of acquisition is 8%. The bonds will mature on July 1, 2023. The journal entries pertaining to the market value adjustments was prepared by the accountant in accordance with the following information: Year Cost Market Value Unrealized Gain / (Loss) 2020 105,242 103,000 (2,242) 2021 105,242 103,500 (1,742) How much is the retroactive adjustment to the beginning balance of retained earnings for the year 2021, pertaining to the investment in BSP bonds? (Please indicate debit or (credit), use negative sign if credit).

You are in charge of auditing PLM (PopoyLangMalakas) Company's investment accounts for the year ended December 31, 2021, which was incorporated last March 3, 2020. During the course of the audit, you have obtained the balances and the related journal entries of its investment related transactions and have revealed the following information: Investment in Bonds P101,258 Investment in Stocks 62,400 Total P163,658 Journal Entries: Investment in bonds - 10% treasury bonds from the Banko Sentral ng Pilipinas. The investment is in a portfolio which has the objective of collecting contractual cash flows. Date Account Debit Credit July 1, 2020 Investment in BSP bonds 105, 242 Cash 105, 242 To record the acquisition of P100,000 face value BSP bonds December 31, 2020 Unrealized Gain / (Loss) on market changes 2,242 Investment in BSP bonds 2,242 To record the market value adjustment for 2020 January 1, 2021 Cash 5,000 Interest revenue 5,000 To record interest for 6 months July 1, 2021 Cash 5,000 Interest revenue 5,000 To record interest for 6 months December 31, 2021 Unrealized Gain / (Loss) on market changes 1,742 Investment in BSP bonds 1,742 To record the market value adjustment for 2021 Audit Notes: The market rate for similar bonds at date of acquisition is 8%. The bonds will mature on July 1, 2023. The journal entries pertaining to the market value adjustments was prepared by the accountant in accordance with the following information: Year Cost Market Value Unrealized Gain / (Loss) 2020 105,242 103,000 (2,242) 2021 105,242 103,500 (1,742) How much is the retroactive adjustment to the beginning balance of retained earnings for the year 2021, pertaining to the investment in BSP bonds? (Please indicate debit or (credit), use negative sign if credit).

Financial Accounting

15th Edition

ISBN:9781337272124

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter15: Investments And Fair Value Accounting

Section: Chapter Questions

Problem 1PB: Rekya Mart Inc. is a general merchandise retail company that began operations on January 1, Year 1....

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Investment in Bonds P101,258

Investment in Stocks 62,400

Total P163,658

Journal Entries:

Investment in bonds - 10% treasury bonds from the Banko Sentral ng Pilipinas. The investment is in a portfolio which has the objective of collecting contractual cash flows.

Date	Account	Debit	Credit
July 1, 2020	Investment in BSP bonds	105, 242
	Cash		105, 242
	To record the acquisition of P100,000 face value BSP bonds

December 31, 2020	Unrealized Gain / (Loss) on market changes	2,242
	Investment in BSP bonds		2,242
	To record the market value adjustment for 2020

January 1, 2021	Cash	5,000
	Interest revenue		5,000
	To record interest for 6 months

July 1, 2021	Cash	5,000
	Interest revenue		5,000
	To record interest for 6 months

December 31, 2021	Unrealized Gain / (Loss) on market changes	1,742
	Investment in BSP bonds		1,742
	To record the market value adjustment for 2021

Audit Notes:

The market rate for similar bonds at date of acquisition is 8%.
The bonds will mature on July 1, 2023.
The journal entries pertaining to the market value adjustments was prepared by the accountant in accordance with the following information:

Year	Cost	Market Value	Unrealized Gain / (Loss)
2020	105,242	103,000	(2,242)
2021	105,242	103,500	(1,742)

How much is the retroactive adjustment to the beginning balance of retained earnings for the year 2021, pertaining to the investment in BSP bonds? (Please indicate debit or (credit), use negative sign if credit).

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