week7homework.docx - Marj Crandall ACCT551 Dr Schmidt Week 7 Homework E17-4(LO1(Entries for Available-for-Sale Securities Assume the same information as

week7homework.docx - Marj Crandall ACCT551 Dr Schmidt Week...

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Marj CrandallACCT551Dr, Schmidt12/10/17Week 7 HomeworkE17-4(LO1)(Entries for Available-for-Sale Securities)Assume the same information as in E17-3 except that the securities are classified as available-for-sale. The fair value of the bonds at December 31 of each year-end is as follows.2017$320,5002020$310,0002018$309,0002021$300,0002019$308,000Instructions(a)Prepare the journal entry at the date of the bond purchase.Jan 1 2017Debt Investments (Available for sale)$322,744.44Cash$322,744.44(b)Prepare the journal entries to record the interest revenue andrecognition of fair value for 2017.December 31, 2017 Cash$36,000 Available-for-Sale Securities $3,725.56 Interest Revenue ($322,744.44 X .10) $32,274.44 Securities Fair Value Adjustment(Available-for-Sale) $1,481.12 Unrealized Holding Gain or LossEquity ($320,500.00 – $319,018.88)$1,481.12 (c)Prepare the journal entry to record the recognition of fair value for2018.December 31, 2018 Unrealized Holding Gain or Loss—Equity $7,401.89Securities Fair Value Adjustment(Available-for-Sale)$7,401.89 Amortized Cost Fair Value Unrealized Holding Gain (Loss) Available-for-sale bonds $314,920.77 $309,000.00 ($5,920.77) Previous securities fair value adjustment—Dr. $1,481.12Securities fair value
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adjustment—Cr.($7,401.89)E17-9(LO1)(Available-for-Sale Debt Securities Entries and Financial Statement Presentation)
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