During 2019, Dana Company decided to begin investing its idle cash in marketable securities. The information contained below relates to Dana’s 2019 marketable security transactions: Transactions: Apr. 1 Purchased $20,000 face value of Solomon Inc. 12% bonds at par plus accrued interest; interest on the bonds is payable each June 30 and December 31. June 30 Received the semiannual interest on the Solomon bonds. Nov. 1 Purchased $30,000 face value of Edwards Company 11% bonds at par plus accrued interest; interest on the bonds is payable each June 1 and December 1. Dec. 1 Received the interest on the Edwards bonds and sold the bonds for $30,300. Dec. 31 Received the interest on the Solomon bonds. At year-end, the market price of the Solomon bonds was $20,200.
During 2019, Dana Company decided to begin investing its idle cash in marketable securities. The information contained below relates to Dana’s 2019 marketable security transactions: Transactions: Apr. 1 Purchased $20,000 face value of Solomon Inc. 12% bonds at par plus accrued interest; interest on the bonds is payable each June 30 and December 31. June 30 Received the semiannual interest on the Solomon bonds. Nov. 1 Purchased $30,000 face value of Edwards Company 11% bonds at par plus accrued interest; interest on the bonds is payable each June 1 and December 1. Dec. 1 Received the interest on the Edwards bonds and sold the bonds for $30,300. Dec. 31 Received the interest on the Solomon bonds. At year-end, the market price of the Solomon bonds was $20,200.
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
Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable
Section: Chapter Questions
Problem 16E
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Question
During 2019, Dana Company decided to begin investing its idle cash in marketable securities. The information contained below relates to Dana’s 2019 marketable security transactions:
| Transactions: | ||
| Apr. | 1 | Purchased $20,000 face value of Solomon Inc. 12% bonds at par plus accrued interest; interest on the bonds is payable each June 30 and December 31. |
| June | 30 | Received the semiannual interest on the Solomon bonds. |
| Nov. | 1 | Purchased $30,000 face value of Edwards Company 11% bonds at par plus accrued interest; interest on the bonds is payable each June 1 and December 1. |
| Dec. | 1 | Received the interest on the Edwards bonds and sold the bonds for $30,300. |
| Dec. | 31 | Received the interest on the Solomon bonds. At year-end, the market price of the Solomon bonds was $20,200. |
Required:
| 1. | Record Dana’s investment transactions for 2019. |
| 2. | Show the items of income or loss on available-for-sale investments Dana reports on its 2019 income statement. |
| 3. | Show the carrying value of Dana’s investment account on its December 31, 2019, balance sheet. |
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