1.
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, 2018.
2.
To Journalize: The semiannual interest received by Company FM on June 30, 2018.
3.
To Journalize: The semiannual interest received by Company FM on December 31, 2018.
4.
To Calculate: The amount of investment to be recorded in the balance sheet of Company FM on December 31, 2018.
5.
To Explain: The effect of investment by Company FM on December 31, 2018, in the statement of cash flows.
6.
To Explain: The effect of investment by Company FM on December 31, 2018, for the above requirements if the Company FM decided to hold the investment till maturity.
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Chapter 12 Solutions
INTERMEDIATE ACCOUNTING(LL)-W/CONNECT
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