Chapter_17_problems - SOLUTIONS TO PROBLEMS PROBLEM 17-1...

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Unformatted text preview: SOLUTIONS TO PROBLEMS PROBLEM 17-1 (a) December 31, 2008 Held-to-Maturity Securities....................... 108,660 Cash................................................... 108,660 (b) December 31, 2009 Cash............................................................. 7,000 Held-to-Maturity Securities.............. 1,567 Interest Revenue............................... 5,433 (c) December 31, 2011 Cash............................................................ 7,000 Held-to-Maturity Securities.............. 1,728 Interest Revenue............................... 5,272 (d) December 31, 2008 Available-for-Sale Securities..................... 108,660 Cash................................................... 108,660 (e) December 31, 2009 Cash............................................................. 7,000 Available-for-Sale Securities........... 1,567 Interest Revenue............................... 5,433 Unrealized Holding Gain or Loss Equity ($107,093 $106,500)................. 593 Securities Fair Value Adjustment (Available-for-Sale)....................... 593 (f) December 31, 2011 Cash............................................................. 7,000 Available-for-Sale Securities........... 1,728 Interest Revenue............................... 5,272 PROBLEM 17-1 (Continued) Available-for-Sale Securities Amortized Cost Fair Value Unrealized Gain (Loss) Spangler Company, 7% bonds $103,719 $105,650 $1,931 Previous securities fair value adjustmentDr. 2,053 * Securities fair value adjustment Cr. $ (122 ) *($107,500 $105,447) Unrealized Holding Gain or LossEquity................. 122 Securities Fair Value Adjustment (Available-for-Sale)............................................ 122 PROBLEM 17-2 (a) January 1, 2010 purchase entry: Available-for-Sale Securities................................... 369,114 Cash................................................................... 369,114 (b) The amortization schedule is as follows: Schedule of Interest Revenue and Bond Discount AmortizationEffective-Interest Method 8% Bonds Purchased to Yield 10% Date Interest Receivable Or Cash Received Interest Revenue Bond Discount Amortization Carrying Amount of Bonds 1/1/10 $369,114 7/1/10 16,000 $ 18,456 $ 2,456 371,570 12/31/10 16,000 18,579 2,579 374,149 7/1/11 16,000 18,707 2,707 376,856 12/31/11 16,000 18,843 2,843 379,699 7/1/12 16,000 18,985 2,985 382,684 12/31/12 16,000 19,134 3,134 385,818 7/1/13 16,000 19,291 3,291 389,109 12/31/13 16,000 19,455 3,455 392,564 7/1/14 16,000 19,628 3,628 396,192 12/31/14 16,000 19,808 * 3,808 400,000 Total $160,000 $190,886 $30,886 *$2 difference due to rounding. (c) Interest entries: July 1, 2010 Cash........................................................................... 16,000 Available-for-Sale Securities................................... 2,456 Interest Revenue..................................................
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This note was uploaded on 06/19/2011 for the course ACC550 ACC550 taught by Professor Rich during the Spring '10 term at Keller Graduate School of Management.

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Chapter_17_problems - SOLUTIONS TO PROBLEMS PROBLEM 17-1...

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