Financial Accounting: Tools for Business Decision Making, 8th Edition
8th Edition
ISBN: 9781118953808
Author: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso
Publisher: WILEY
expand_more
expand_more
format_list_bulleted
Question
Chapter AH, Problem H.8E
(a)
To determine
Trading securities: It refers to the buying and selling of short-term debt or equity securities to generate profits in the current period.
Available-for-sale securities: Available-for-sale are short-term or long-term debt equity securities that are not classified as trading or held to maturity securities. These securities are readily sold in the short-term to receive return on investment.
To Prepare: The
(b)
To determine
To Prepare: The statement presentation of each class of securities and the related unrealized gain (loss) accounts.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Marigold Company in its first year of operations provides the following information related to one of its available-for-sale debt securities at December 31, 2020.
Amortized cost
$51,100
Fair value
42,200
Expected credit losses
12,600
A. What is the amount of credit loss that marigold should report on this available-for-sale security at december 31, 2020?
Amount of the credit loss $ 8,900
B. Prepare the journal entry to record the credit loss, if any ( and other adjustments needed), at December 31, 2020?
date account titles and explanations debit credit
12/31/20 8,900
8,900
Please note that the answer is NOT Debit Loss on available for sale debt securities and Credit avilable for sale debt securities.
These are the account titles I can choose from...
Accumulated Other…
At December 31, 2022, available-for-sale debt securities for Storrer, Inc. are as follows. The securities are considered to be a long-term investment.
Security. Cost. Fair Value
A $17,500 16,000
B 12,500 14,000
C 23,000 21,000
53,000 51,000
A. Prepare the adjusting entry at December 31, 2022 to report the securities at fair value.
B- Show the statement presentation at December 31,2022, after adjustment to fair value.
C- E. Kretsinger, a member of the board of directors, does not understand the reporting of the unreal-
ized gains or losses. Write a letter to Ms. Kretsinger explaining the reporting and the purposes that it serves.
Tamarisk Company in its first year of operations provides the following information related to one of its available-for-sale debt securities at December 31, 2020.
Amoortization cost $52,100
Fair Value 44,200
Expected credit losses 12,850
What is the amount of the credit loss that Tamarisk should report on this available-for-sale security at December 31, 2020?
Prepare the journal entry to record the credit loss, if any (and any other adjustment needed), at December 31, 2020.
Assume that the fair value of the available-for-sale security is $57,200 at December 31, 2020, instead of $44,200. What is the amount of the credit loss that Tamarisk should report at December 31, 2020?
Assume the same information as for part (c). Prepare the journal entry to record the credit loss, if necessary (and any other adjustment needed), at December 31, 2020.
Chapter AH Solutions
Financial Accounting: Tools for Business Decision Making, 8th Edition
Ch. AH - Prob. 1QCh. AH - Prob. 2QCh. AH - Prob. 3QCh. AH - Prob. 4QCh. AH - What is the cost of an investment in stock?Ch. AH - Prob. 6QCh. AH - Prob. 7QCh. AH - Prob. 8QCh. AH - Prob. 9QCh. AH - Distinguish between the cost and equity methods of...
Ch. AH - What are consolidated financial statements?Ch. AH - What are the valuation guidelines for trading and...Ch. AH - Prob. 13QCh. AH - Prob. 14QCh. AH - Prob. 15QCh. AH - Prob. 16QCh. AH - Prob. 17QCh. AH - Prob. 18QCh. AH - Prob. H.1BECh. AH - Prob. H.2BECh. AH - Prob. H.3BECh. AH - Prob. H.4BECh. AH - Prob. H.5BECh. AH - Prob. H.6BECh. AH - Prob. H.7BECh. AH - Prob. H.8BECh. AH - Prob. H.1ECh. AH - Prob. H.2ECh. AH - Prob. H.3ECh. AH - Prob. H.4ECh. AH - Prob. H.5ECh. AH - Prob. H.6ECh. AH - Prob. H.7ECh. AH - Prob. H.8ECh. AH - Prob. H.1PCh. AH - Prob. H.2PCh. AH - Prob. H.3PCh. AH - Prob. H.4PCh. AH - Prob. H.5PCh. AH - Prob. H.6P
Knowledge Booster
Similar questions
- During 2021, Anthony Company purchased debt securities as a long-term investment and classified them as trading. All securities were purchased at par value. Pertinent data are as follows: The net holding gain or loss included in Anthonys income statement for the year should be: a. 0 b. 3,000 gain c. 9,000 loss d. 12,000 lossarrow_forwardRefer to the information in RE13-5. Assume that on December 31, 2019, the investment in Smith Corporation bonds has a market value of 12,500. Prepare the year-end journal entry to record the unrealized gain or loss.arrow_forwardRios Financial Co. is a regional insurance company that began operations on January 1, Year 1. The following transactions relate to trading securities acquired by Rios Financial Co., which has a fiscal year ending on December 31: Instructions 1. Journalize the entries to record these transactions. 2. Prepare the investment-related current asset balance sheet presentation for Rios Financial Co. on December 31, Year 2. 3. How are unrealized gains or losses on trading investments presented in the financial statements of Rios Financial Co.?arrow_forward
- Soto Industries Inc. is an athletic footware company that began operations on January 1, Year 1. The following transactions relate to debt investments acquired by Soto Industries Inc., which has a fiscal year ending on December 31: Instructions 1. Journalize the entries to record these transactions. 2. If the bond portfolio is classified as available for sale, what impact would this have on financial statement disclosure?arrow_forwardRefer to the information in RE13-11. Assume that on December 31, 2019, the investment in Cornett Company stock has a market value of 10,500. Prepare the year-end journal entry to record the unrealized gain or loss.arrow_forwardRekya Mart Inc. is a general merchandise retail company that began operations on January 1, Year 1. The following transactions relate to debt investments acquired by Rekya Mart Inc., which has a fiscal year ending on December 31: Instructions 1. Journalize the entries to record these transactions. 2. If the bond portfolio is classified as available for sale, what impact would this have on financial statement disclosure?arrow_forward
- Graham Railways Inc. is evaluating its operations and provides the following information: Required: For each of the years 2017 through 2019, calculate Graham Railwayss earnings per share and dividend yield ratio. The company has no preferred stock or other potentially dilutive securities outstanding.arrow_forwardIn its first year of operations, Sandhill Corporation purchased, as a long-term investment, available-for-sale debt securities costing $70,000. At December 31, 2020, the fair value of the securities is $65,000.Prepare the adjusting entry to record the securities at fair value. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit Dec. 31arrow_forwardFor several years Fister Links Products has held Microsoft bonds, considered by the company to be securities available-for-sale. The bonds were acquired at a cost of $500,000. At the end of 2018, their fair value was$610,000 and their amortized cost was $510,000. At the end of 2019, their fair value was $600,000 and theiramortized cost was $520,000. At what amount will the investment be reported in the December 31, 2019, balance sheet? What adjusting entry is required to accomplish this objective (ignore interest)?arrow_forward
- Company maintained a large investment in debt securities valued at approximately $ 42 billion as of the begining of the year. During the year, the debt securities produced investment income (interest income) totaling $2.5 billion. At the year-end, the portfolio of debt securities had appreciated to $45.5 billion. Please prepare the journal entries to record the year-end adjusting entries assuming that the debt portfolio is Clasified as trading securities and Clasified as available-for-sale securities and prepare the journal entry to record the interest earned (assume all interest is collected)arrow_forwardAt December 31, 2020, the available-for-sale debt portfolio for Cheyenne Corp. is as follows. Securities Cost Fair Value Unrealized Gain(Loss) Good Co. Bonds $28,800 $26,600 $(2,200 ) Home Co. Bonds 31,700 33,700 2,000 Grand Inc. Debentures 36,700 37,800 1,100 97,200 98,100 900 Before an adjusting entry on December 31, 2020, the fair value adjustment account contained a credit balance of $470. CheyenneCorp. reported net income of $80,100 for 2020. Prepare the adjusting entry at December 31, 2020, to report the portfolio at fair value. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit enter an account title enter a debit amount enter a credit amount enter an account title enter a debit amount enter a credit…arrow_forward
arrow_back_ios
arrow_forward_ios
Recommended textbooks for you
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Financial AccountingAccountingISBN:9781337272124Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
Financial Accounting
Accounting
ISBN:9781337272124
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Cengage Learning