Intermediate Accounting with British Airways Annual Report + Connect Plus

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C-Homework #1 zrv Exercise 12-1 Securities held-to-maturity; bond investment; effective interest [LO1] Tanner-UNF Corporation acquired as a long-term investment $240 million of 6% bonds, dated July 1, on July 1, 2011. Company management has the positive intent and ability to hold the bonds until maturity. The market interest rate (yield) was 8% for bonds of similar risk and maturity. Tanner-UNF paid $200 million for the bonds. The company will receive interest semiannually on June 30 and December 31. As a result of changing market conditions, the fair value of the bonds at December 31, 2011, was $210 million. Required: (1) Prepare the journal entry to record Tanner-UNF's investment in the bonds on July 1, 2011. (Enter your answers in millions. Omit the "$" sign in your response.) General Journal Debit Credit Investment in bonds 240 Discount on bond investment 40 Cash 200 (2) Prepare the journal entries by Tanner-UNF to record interest on December 31, 2011, at the effective (market) rate. (Enter your answers in millions of dollar rounded to 1 decimal place. Omit the "$" sign in your response.) General Journal Debit Credit Cash 7.2 Discount on bond investment .8 Interest revenue 8 (3) At what amount will Tanner-UNF report its investment in the December 31, 2011, balance sheet? (Enter your answer in millions of dollar rounded to 1 decimal place. Omit the "$" sign in your response.) Investment $ 200.8 (4) Suppose Moody's bond rating agency downgraded the risk rating of the bonds motivating Tanner-UNF to sell the investment on January 2, 2012, for $190 million. Prepare the journal entry to record the sale. (Enter your answers in millions of dollar rounded to 1 decimal place. Omit the "$" sign in your response.) General Journal Debit Credit Cash 190 Discount on bond investment 39.2 Loss on sale of investments 10.8 Investment in bonds 240 Exercise 12-3 Purchase and sale of investment securities [LO2, 3] Shott Farm Supplies Corporation purchased 800 shares of General Motors stock at $50 per share and paid a brokerage fee of $1,200. Two months later, the shares were sold for $53 per share. The brokerage fee on the sale was $1,300. Required: Prepare entries for the purchase GM common shares and the sale. (Omit the "$" sign in your response.)
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C-Homework #1 zrv General Journal Debit Credit Investment in GM common shares 41,200 Cash 41,200 Cash 41,100 Loss on sale of investments 100 Investment in GM common shares 41,200 Exercise 12-4 Various transactions relating to trading securities [LO2] Rantzow-Lear Company buys and sells securities expecting to earn profits on short-term differences in price. The company's fiscal year ends on December 31. The following selected transactions relating to Rantzow-Lear's trading account occurred during December 2011 and the first week of 2012. 2011
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This note was uploaded on 02/23/2012 for the course CONT 4019 taught by Professor N/a during the Spring '12 term at UPR Mayagüez.

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Asignacion 1 - Exercise 12-1 Securities held-to-maturity...

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