2 Semester Cengage Now, Warren Accounting
26th Edition
ISBN: 9781305662308
Author: WARREN
Publisher: Cengage
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Chapter 15, Problem 15.2EX
To determine
Bond investment: Bond investments are debt securities which pay a fixed interest revenue to the investor.
Debit and credit rules:
- Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in
stockholders’ equity accounts.
- Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.
To journalize: The bond investment transactions in the books of K Investments.
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Entries for bond (held-to-maturity) investments
Bula Investments acquired $264,000 of Effenstein Corp., 9% bonds at their face amount on October 1, 20Y1. The bonds pay interest on October 1 and April 1. On April 1, 20Y2, Bula sold $118,000 of Effenstein Corp. bonds at 104.
Journalize the entries to record the following selected transactions:
a. The initial acquisition of the Effenstein Corp. bonds on October 1, 20Y1.
b. The adjusting entry for 3 months of accrued interest earned on the Effenstein Corp. bonds on December 31, 20Y1.
c. The receipt of semiannual interest on April 1, 20Y2.
d. The sale of $118,000 of Effenstein Corp. bonds on April 1, 20Y2, at 104.
e. The receipt of the face value of the remaining bonds at their maturity on October 1, 20Y8.
Entries for bond (held-to-maturity) investments
Demopoulos Company acquired $203,400 of Marimar Co., 7% bonds on May 1 at their face amount. Interest is paid semiannually on
May 1 and November 1. On November 1, Demopoulos Company sold $44,400 of the bonds for 99.
Journalize the entries to record the following:
If an amount box does not require an entry, leave it blank.
a. The initial acquisition of the bonds on May 1.
May 1
b. The s
Nov. 1
Cash
Nov. 1
Interest Receivable
Interest Revenue
Investments-Marimar Co. Bonds
c. The sNotes Receivable
lovember 1.
d. The accrual of $1,855 interest on December 31.
Torres Investments acquired $233,600 of Murphy Corp., 6% bonds at their face amount on October 1, Year 1. The bonds pay interest on October 1 and April 1. On April 1, Year 2, Torres sold $111,200 of Murphy Corp. bonds at 105.
Journalize the entries to record the following (refer to the Chart of Accounts for exact wording of account titles):
a.
The initial acquisition of the Murphy Corp. bonds on October 1, Year 1.
b.
The adjusting entry for three months of accrued interest earned on the Murphy Corp. bonds on December 31, Year 1.
c.
The receipt of semiannual interest on April 1, Year 2.
d.
The sale of $111,200 of Murphy Corp. bonds on April 1, Year 2, at 105.
Chapter 15 Solutions
2 Semester Cengage Now, Warren Accounting
Ch. 15 - Why might a business invest cash in temporary...Ch. 15 - What causes a gain or loss on the sale of a bond...Ch. 15 - When is the equity method the appropriate...Ch. 15 - How does the accounting for a dividend received...Ch. 15 - Prob. 5DQCh. 15 - What is the major difference in the accounting for...Ch. 15 - Prob. 7DQCh. 15 - How would a debit balance in Unrealized Gain...Ch. 15 - What are the factors contributing to the trend...Ch. 15 - Prob. 10DQ
Ch. 15 - Prob. 15.1APECh. 15 - Bond investment transactions Journalize the...Ch. 15 - Prob. 15.2APECh. 15 - Stock investment transactions On September 12,...Ch. 15 - Prob. 15.3APECh. 15 - Prob. 15.3BPECh. 15 - Prob. 15.4APECh. 15 - Prob. 15.4BPECh. 15 - Prob. 15.5APECh. 15 - Prob. 15.5BPECh. 15 - Prob. 15.6APECh. 15 - Prob. 15.6BPECh. 15 - Prob. 15.1EXCh. 15 - Prob. 15.2EXCh. 15 - Prob. 15.3EXCh. 15 - Prob. 15.4EXCh. 15 - Prob. 15.5EXCh. 15 - Entries for investment in stock, receipt of...Ch. 15 - Prob. 15.7EXCh. 15 - Prob. 15.8EXCh. 15 - Entries for stock investments, dividends, and sale...Ch. 15 - Prob. 15.10EXCh. 15 - Prob. 15.11EXCh. 15 - Prob. 15.12EXCh. 15 - Prob. 15.13EXCh. 15 - Prob. 15.14EXCh. 15 - Prob. 15.15EXCh. 15 - Prob. 15.16EXCh. 15 - Fair value journal entries, trading investments...Ch. 15 - Prob. 15.18EXCh. 15 - Prob. 15.19EXCh. 15 - Prob. 15.20EXCh. 15 - Prob. 15.21EXCh. 15 - Prob. 15.22EXCh. 15 - Prob. 15.23EXCh. 15 - Prob. 15.24EXCh. 15 - Prob. 15.25EXCh. 15 - Prob. 15.26EXCh. 15 - Prob. 15.27EXCh. 15 - Prob. 15.28EXCh. 15 - Prob. 15.29EXCh. 15 - Prob. 15.1APRCh. 15 - Prob. 15.2APRCh. 15 - Stock Investment transaction, equity method and...Ch. 15 - Prob. 15.4APRCh. 15 - Prob. 15.1BPRCh. 15 - Prob. 15.2BPRCh. 15 - Stock investment transactions, equity method and...Ch. 15 - Prob. 15.4BPRCh. 15 - Selected transactions completed by Equinox...Ch. 15 - Benefits of fair value On July 16, 1998, Wyatt...Ch. 15 - International fair value accounting International...Ch. 15 - Prob. 15.3CPCh. 15 - Warren Buffett and "look-through" earnings...Ch. 15 - Prob. 15.5CP
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