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1.
Available-for-sale investments:
Available-for-sale investments are the investments in debt or equity securities, where the investor wishes to holds less than 20% of voting stock, and neither referred as trading or hold-to-maturity investments. For debt securities, the investor do not wish to hold it till maturity, and hence reported either as current assets or as long-term assets in the
To Journalize: The transactions for Restaurant R’s investment in B Incorporation stock for the year 2016.
2.
To identify: The category, and the value of the asset that the Restaurant R would report on its balance sheet as on December 31, 2016.
To identify: The account in which the market price change in Incorporation B’s stock would be reported.
3.
The net effect of the investment on the Restaurant R’s net income for the year ended December 31, 2016.
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Chapter 10 Solutions
Horngren's Financial & Managerial Accounting Plus Mylab Accounting With Pearson Etext -- Access Card Package (5th Edition) (miller-nobles Et Al., The Horngren Accounting Series)
- On December 1, 2024, Loki's Restaurant decides to invest excess cash of $56,000 from the tourist season by purchasing a Robin, Inc. bond at face value. At year-end, December 31, 2024, Robin's bond had a market value of $52,800. The investment is categorized as an available-for-sale debt investment and will be held for the short-term. Read the requirements. Requirement 1. Journalize the transactions for Loki's investment in Robin, Inc. for 2024. (Record debits first, then credits. Select the explanation on the last line of the journal entry table. If no entry is required, select "No entry required" on the first line of the Accounts and Explanation column and leave the remaining cells blank.) Begin by journalizing Loki's investment in the Robin, Inc., bond on December 1, 2024. Date Accounts and Explanation Dec. 1 Debit C Credit Requirements 1. Journalize the transactions for Loki's investment in Robin, Inc. for 2024. 2. In what category and at what value would Loki report the asset on…arrow_forwardOn June 1, 2024, Sam's Restaurant decides to invest excess cash of $56,000 from the tourist season by purchasing a Bison, Inc. bond at face value. At year-end, December 31, 2024, Bison's bond had a market value of $52,200. The investment is categorized as an available-for-sale debt investment and will be held for the short-term 1. Journalize the transactions for Sam's investment in Bison, Inc. for 2024. 2. In what category and at what value would Sam report the asset on the December 31, 2024, balance sheet? In what account would the market price change in Bison's stock be reported, if at all? 3. What was the net effect of the investment on Sam's net income for the year ended December 31, 2024?arrow_forwardPrepare Hertog Company's journal entries to record the following transactions for the current year. May 7 Purchases Kraft bonds as a short-term investment in trading securities at a cost of $10,990. June 6 Sells its entire investment in Kraft bonds for $11,510 cash. View transaction list Journal entry worksheet 1 2 Purchases Kraft bonds as a short-term investment in trading securities at a cost of $10,990. Note: Enter debits before credits. Date May 07 Record entry General Journal Clear entry Debit Credit View general journal >arrow_forward
- Ticker Services began operations in Year 1 and holds long-term investments in available-for-sale debt securities. The year-end cost and fair values for its portfolio of these investments follow. Portfolio of Available-for-Sale Securities December 31, Year 1 December 31, Year 2 Cost $ 13,000 20,000 23,000 16,500 December 31, Year 3 December 31, Year 4 Complete this question by entering your answers in the tabs below. Prepare journal entries to record each year-end fair value adjustment for these securities. Adjustment General Journal Calculation Calculation adjustment required to fair value adjustment. 12/31/Year 1 Existing balance in Fair Value Adjustment-AFS (LT) Required balance in Fair Value Adjustment-AFS (LT) Adjustment required to Fair Value Adjustment-AFS (LT) 12/31/Year 2 Existing balance in Fair Value Adjustment-AFS (LT) Required balance in Fair Value Adjustment-AFS (LT) Adjustment required to Fair Value Adjustment-AFS (LT) 12/31/Year 3 Existing balance in Fair Value…arrow_forward(c) Prepare the entries required to record any accrued interest, amortization of any premium or discount, and recognition of fair values on December 31, 2023. (Round answer to O decimal places, e.g. 5,275. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) Date Account Titles and Explanation Dec. 31 Dec. 31 (To record accrued interest) (To record fair value adjustment) Debit Credit JUU DOarrow_forwardAccounting Cullumber Carecenters Inc. provides financing and capital to the healthcare industry, with a particular focus on nursing homes for the elderly. The following selected transactions relate to bonds acquired as an investment by Cullumber, whose fiscal year ends on December 31. 2022 Jan. 1 Purchased at face value $1,089,000 of Javier Nursing Centers, Inc., 10-year, 5% bonds dated January 1, 2022, directly from Javier. Dec. 31 Accrual of interest at year-end on the Javier bonds. Assume that all intervening transactions and adjustments have been properly recorded and the number of bonds owned has not changed from December 31, 2022, to December 31, 2024. 2025 Jan. 1 Received the annual interest on the Javier bonds. Jan. 1 Sold $544,500 Javier bonds at 107. Dec. 31 Accrual of interest at year-end on the Javier bonds. Date Account Titles and Explanation Debit Credit 2022 + Debt Investments 1,089,000 Cash 1,089,000 31, 2022 Interest Receivable 54,450 Interest Revenue 54,450 2025 Cash…arrow_forward
- suuctions Chart of Accounts Journal Instructions Seamus Industries Inc. buys and sells investments as part of its ongoing cash management. The following investment transactions were completed during the year: Feb. May July Aug. Oct. 24 Acquired 1,200 shares of Tett Co. stock for $82 per share plus a $140 brokerage commission. Acquired 2,600 shares of Issacson Co. stock for $35 per share plus a $105 commission. 16 14 12 31 400 shares of Tett Co. stock for $100 per share less a $80 brokerage commission. Sold 710 shares of Issacson Co. stock for $33.00 per share less an $85 brokerage commission. Received dividends of $0.40 per share on Tett Co. stock. Journalize the entries for these transactions. Refer to the Chart of Accounts for exact wording of account titles. When required, round your answers to the nearest dollar. Check My Work 3 more Check My Work uses remaining. O All work saved. DELLarrow_forwardRequirement 3. Prepare a comprehensive income statement for Thyme Investments for year ended December 31, 2018. Assume net income was $320,000. (Use a minus sign or parentheses to enter a loss.) 2018 Jan. 5 Purchased Vince Company's $525,000 bond at face value. Thyme classified the investment as available-for-sale. The Vince bond pays interest at the annual rate of 6% on June 30 and December 31 and matures on December 31, 2021 Management's intent is to keep the bonds for several years . June 30 Received an interest payment from Vince Dec.31 Received an interest payment from Vince. Dec.31 Adjusted the investment to its current market value of $518.500 .arrow_forwardInvestments in Equity Securities Manson Incorporated reported investments in equity securities of 60,495 as a current asset on its December 31, 2018, balance sheet. An analysis of Mansons investments on December 31, 2018, reveals the following: During 2019, the following transactions related to Mansons investments occurred: Required: 1. Assuming Manson prepares quarterly financial statements, prepare journal entries to record the preceding information. 2. Show the items of income or loss from investment transactions that Manson reports for each quarter of 2019. 3. Show how Mansons investments are reported on the balance sheet on March 31, 2019; June 30, 2019; September 30, 2019; and December 31, 2019.arrow_forward
- Forte Inc. produces and sells theater set designs and costumes. The company began operations on January 1, Year 1. The following transactions relate to securities acquired by Forte Inc., which has a fiscal year ending on December 31: Instructions 1. Journalize the entries to record these transactions. 2. Prepare the investment-related asset and stockholders equity balance sheet presentation for Forte Inc. on December 31, Year 2, assuming that the Retained Earnings balance on December 31, Year 2, is 389,000.arrow_forwardInvestment Reporting O'Brien Industries Inc. is a book publisher. Note 1. Investments are classified as available for sale. The investments at cost and fair value on December 31, Year 1, are as follows: Cost per Share Bernard Co. stock Chadwick Co. stock Year 2 May 5. Oct. 1. Oct. 9. Dec. 31. Dec. 31. Dec. 31. Note 2. The investment in Jolly Roger Co. stock is an equity method investment representing 30% of the outstanding shares of Jolly Roger Co. The following selected investment transactions occurred during Year 2: Available-for-Sale Investments Bernard Co. stock No. of Shares Chadwick Co. stock Dec. 31. Gozar Inc. stock 1,600 Nightline Co. bonds Required: 900 Purchased 1,900 shares of Gozar Inc. at $26 per share including brokerage commission. Gozar Inc. is classified as an available-for- sale security. Purchased $33,000 of Nightline Co. 5%, 10-year bonds at 100. The bonds are classified as available for sale. The bonds pay interest on October 1 and April 1. Dividends of $9,000 are…arrow_forwardPrepare the Journal 27 Returned $40,000 consignment goods to Consignee Trading Limited. The goods are delivered by Consignee Trading Limited to ITI for consignment purpose in February 2021. 28 Purchased $25,000 play mats from Millan Company, FOB Destination, terms 1/10, n/45. The shipping document showed that the goods were received on 3rd April 2021. 29 A cash dividend was declared for preference shares and a cash dividend of $0.02 per share was declared for ordinary shares. The dividends will be paid in April. 30 Received a check of $14,000 from the liquidator of YOT Limited. The liquidator issued a revised statement to inform ITI that $14,000 is the finalized amount for the settlement of the $16,000 outstanding balance.arrow_forward
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