Investment : The act of allocating money to buy a monetary asset, in order to generate wealth in the future is referred to as investment. Journal: Journal is the method of recording monetary business transactions in chronological order. It records the debit and credit aspects of each transaction to abide by the double-entry system. Rules of Debit and Credit: Following rules are followed for debiting and crediting different accounts while they occur in business transactions: Debit , all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities . Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses. To Journalize: The investment made by Company FM on January 1, 2016.

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Answer 1

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Chapter 12, Problem 12.1P

a)

To determine

Investment: The act of allocating money to buy a monetary asset, in order to generate wealth in the future is referred to as investment.

Journal: Journal is the method of recording monetary business transactions in chronological order. It records the debit and credit aspects of each transaction to abide by the double-entry system.

Rules of Debit and Credit:

Following rules are followed for debiting and crediting different accounts while they occur in business transactions:

Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities.

Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses.

To Journalize: The investment made by Company FM on January 1, 2016.

b)

To determine

To Journalize: The semiannual interest received by Company FM on June 30, 2016.

c)

To determine

To Journalize: The semiannual interest received by Company FM on December 31, 2016.

d)

To determine

To Calculate: The amount of investment to be recorded in the balance sheet of Company FM on December 31, 2016.

e)

To determine

To Explain: The effect of investment by Company FM on December 31, 2016, in the statement of cash flows.

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Answer 2

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Chapter 12, Problem 12.1P

a)

To determine

Investment: The act of allocating money to buy a monetary asset, in order to generate wealth in the future is referred to as investment.

Journal: Journal is the method of recording monetary business transactions in chronological order. It records the debit and credit aspects of each transaction to abide by the double-entry system.

Rules of Debit and Credit:

Following rules are followed for debiting and crediting different accounts while they occur in business transactions:

Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities.

Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses.

To Journalize: The investment made by Company FM on January 1, 2016.

b)

To determine

To Journalize: The semiannual interest received by Company FM on June 30, 2016.

c)

To determine

To Journalize: The semiannual interest received by Company FM on December 31, 2016.

d)

To determine

To Calculate: The amount of investment to be recorded in the balance sheet of Company FM on December 31, 2016.

e)

To determine

To Explain: The effect of investment by Company FM on December 31, 2016, in the statement of cash flows.

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Answer 3

Question

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Chapter 12, Problem 12.1P

a)

To determine

Investment: The act of allocating money to buy a monetary asset, in order to generate wealth in the future is referred to as investment.

Journal: Journal is the method of recording monetary business transactions in chronological order. It records the debit and credit aspects of each transaction to abide by the double-entry system.

Rules of Debit and Credit:

Following rules are followed for debiting and crediting different accounts while they occur in business transactions:

Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities.

Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses.

To Journalize: The investment made by Company FM on January 1, 2016.

b)

To determine

To Journalize: The semiannual interest received by Company FM on June 30, 2016.

c)

To determine

To Journalize: The semiannual interest received by Company FM on December 31, 2016.

d)

To determine

To Calculate: The amount of investment to be recorded in the balance sheet of Company FM on December 31, 2016.

e)

To determine

To Explain: The effect of investment by Company FM on December 31, 2016, in the statement of cash flows.

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Answer 4

Question

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Chapter 12, Problem 12.1P

a)

To determine

Investment: The act of allocating money to buy a monetary asset, in order to generate wealth in the future is referred to as investment.

Journal: Journal is the method of recording monetary business transactions in chronological order. It records the debit and credit aspects of each transaction to abide by the double-entry system.

Rules of Debit and Credit:

Following rules are followed for debiting and crediting different accounts while they occur in business transactions:

Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities.

Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses.

To Journalize: The investment made by Company FM on January 1, 2016.

b)

To determine

To Journalize: The semiannual interest received by Company FM on June 30, 2016.

c)

To determine

To Journalize: The semiannual interest received by Company FM on December 31, 2016.

d)

To determine

To Calculate: The amount of investment to be recorded in the balance sheet of Company FM on December 31, 2016.

e)

To determine

To Explain: The effect of investment by Company FM on December 31, 2016, in the statement of cash flows.

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Answer 5

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Answer 6

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Answer 7

Chapter 12, Problem 12.1P

a)

To determine

Investment: The act of allocating money to buy a monetary asset, in order to generate wealth in the future is referred to as investment.

Journal: Journal is the method of recording monetary business transactions in chronological order. It records the debit and credit aspects of each transaction to abide by the double-entry system.

Rules of Debit and Credit:

Following rules are followed for debiting and crediting different accounts while they occur in business transactions:

Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities.

Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses.

To Journalize: The investment made by Company FM on January 1, 2016.

b)

To determine

To Journalize: The semiannual interest received by Company FM on June 30, 2016.

c)

To determine

To Journalize: The semiannual interest received by Company FM on December 31, 2016.

d)

To determine

To Calculate: The amount of investment to be recorded in the balance sheet of Company FM on December 31, 2016.

e)

To determine

To Explain: The effect of investment by Company FM on December 31, 2016, in the statement of cash flows.

Answer 8

Chapter 12, Problem 12.1P

a)

To determine

Investment: The act of allocating money to buy a monetary asset, in order to generate wealth in the future is referred to as investment.

Journal: Journal is the method of recording monetary business transactions in chronological order. It records the debit and credit aspects of each transaction to abide by the double-entry system.

Rules of Debit and Credit:

Following rules are followed for debiting and crediting different accounts while they occur in business transactions:

Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities.

Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses.

To Journalize: The investment made by Company FM on January 1, 2016.

Answer 9

Chapter 12, Problem 12.1P

a)

To determine

Investment: The act of allocating money to buy a monetary asset, in order to generate wealth in the future is referred to as investment.

Journal: Journal is the method of recording monetary business transactions in chronological order. It records the debit and credit aspects of each transaction to abide by the double-entry system.

Rules of Debit and Credit:

Following rules are followed for debiting and crediting different accounts while they occur in business transactions:

Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities.

Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses.

To Journalize: The investment made by Company FM on January 1, 2016.

Answer 10

b)

To determine

To Journalize: The semiannual interest received by Company FM on June 30, 2016.

Answer 11

b)

To determine

To Journalize: The semiannual interest received by Company FM on June 30, 2016.

Answer 12

c)

To determine

To Journalize: The semiannual interest received by Company FM on December 31, 2016.

Answer 13

c)

To determine

To Journalize: The semiannual interest received by Company FM on December 31, 2016.

Answer 14

d)

To determine

To Calculate: The amount of investment to be recorded in the balance sheet of Company FM on December 31, 2016.

Answer 15

d)

To determine

To Calculate: The amount of investment to be recorded in the balance sheet of Company FM on December 31, 2016.

Answer 16

e)

To determine

To Explain: The effect of investment by Company FM on December 31, 2016, in the statement of cash flows.

Answer 17

e)

To determine

To Explain: The effect of investment by Company FM on December 31, 2016, in the statement of cash flows.

Answer 18

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Answer 19

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Answer 20

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Answer 21

Ch. 12 - Prob. 12.1Q Ch. 12 - When market rates of interest rise after a...Ch. 12 - Does GAAP distinguish between fair values that are...Ch. 12 - When a debt investment is acquired to be held for...Ch. 12 - Prob. 12.5Q Ch. 12 - What is comprehensive income? Its composition...Ch. 12 - Why are holding gains and losses treated...Ch. 12 - Prob. 12.8Q Ch. 12 - Prob. 12.9Q Ch. 12 - Prob. 12.10Q

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To Journalize: The semiannual interest received by Company FM on June 30, 2016.

To Journalize: The semiannual interest received by Company FM on December 31, 2016.

To Calculate: The amount of investment to be recorded in the balance sheet of Company FM on December 31, 2016.

To Explain: The effect of investment by Company FM on December 31, 2016, in the statement of cash flows.

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Chapter 12 Solutions