Class20 - Solutions

Class20 - Solutions - PROBLEM 17-7 (a) February 1...

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PROBLEM 17-7 (a) February 1 Available-for-Sale Securities. ....................... 500,000 Interest Revenue (4/12 x .12 x $500,000). .... 20,000 Cash. ........................................................ 520,000 April 1 Cash. ............................................................... 30,000 Interest Rev. ($500,000 x .12 x 6/12). ..... 30,000 July 1 Available-for-Sale Securities. ....................... 200,000 Interest Revenue (1/12 x .09 x $200,000). .... 1,500 Cash. ........................................................ 201,500 September 1 Cash. ................................................................ 104,000 [($100,000 x 99%) + ($100,000 x .12 x 5/12)] Loss on Sale of Securities. ........................... 1,000 Available-for-Sale Securities. ................. 100,000 Interest Revenue. .................................... 5,000 (5/12 x .12 x $100,000 = $5,000) October 1 Cash [($500,000 – $100,000) x .12 x 6/12]. ... 24,000 Interest Revenue. .................................... 24,000 December 1 Cash ($200,000 x 9% x 6/12). ......................... 9,000 Interest Revenue. .................................... 9,000 1
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PROBLEM 17-7 (Continued) December 31 Interest Receivable. ....................................... 13,500 Interest Revenue. .................................... 13,500 (3/12 x $400,000 x .12 = $12,000) (1/12 x $200,000 x .09 = $1,500) ($12,000 + $1,500 = $13,500) December 31 Unrealized Holding Gain or Loss—Equity. .. 34,000 Securities Fair Value Adjustment (Available-for-Sale). ............................ 34,000 Available-for-Sale Portfolio Security Cost Market Unrealized Gain (Loss) Hilton Paris Co. $400,000 $380,000* $(20,000) Chieftains, Inc. 200,000 186,000 ** (14,000 ) Total $600,000 $566,000 $34,000 *$400,000 x 95% **$200,000 x 93% (Note to instructor: Some students may debit Interest Receivable at date of
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Class20 - Solutions - PROBLEM 17-7 (a) February 1...

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