Warren SM_Ch.15_final - CHAPTER 15 INVESTMENTS AND FAIR...

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CHAPTER 15 INVESTMENTS AND FAIR VALUE ACCOUNTING EXERCISES Ex. 15–1 a. 2010 Sept. 1 Investments—Jericho Corp. Bonds. ........... 120,000 Cash. ........................................................ 120,000 b. 2010 Dec. 31 Interest Receivable. ...................................... 2,400 Interest Revenue. .................................... 2,400 Accrued interest, $120,000 × 6% × 4/12. c. 2011 Mar. 1 Cash. ............................................................. 3,600 Interest Receivable. ................................ 2,400 Interest Revenue. .................................... 1,200* *$120,000 × 6% × 2/12 d. 2011 Mar. 1 Cash. ............................................................. 40,800* Gain on Sale of Investments. ................. 800 Investments—Jericho Corp. Bonds. ... 40,000 *$40,000 × 102%
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Ex. 15–2 a. 2010 July 12 Investments—Bergen County Bonds. ......... 36,000 Interest Receivable. ...................................... 432* Cash. ........................................................ 36,432 *$36,000 × 6% × 72/360 b. May 1 Cash. ............................................................. 1,080* Interest Receivable. ................................ 432 Interest Revenue. .................................... 648 *$36,000 × 6% × ½ Nov. 1 Cash. ............................................................. 1,080 Interest Revenue. .................................... 1,080 c. Dec. 1 Cash. ............................................................. 14,050* Loss on Sale of Investments. ...................... 20 Interest Revenue. .................................... 70 Investments—Bergen County Bonds. ... 14,000 *Bond sale ($14,000 × 1.02). .......................... $14,280 Accrued interest. .......................................... 70 Less brokerage commission. ...................... (300 ) Total proceeds. ............................................. $14,050 d. Dec. 31 Interest Receivable. ...................................... 220 Interest Revenue. .................................... 220 To accrue interest.
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Ex. 15–3 a. 2010 Jan. 21 Investments—Government Bonds. ............. 30,000 Interest Receivable. ...................................... 100* Cash. ........................................................ 30,100 *$30,000 × 6% × 20/360 June 30 Cash. ............................................................. 900* Interest Receivable. ................................ 100 Interest Revenue. .................................... 800 *$30,000 × 6% × ½ Sept. 5 Cash. ............................................................. 11,894* Loss on Sale of Investments. ...................... 240 Interest Revenue. .................................... 134 Investments—Government Bonds. ..... 12,000 *Bond sale ($12,000 × 98%). ......................... $11,760 Accrued interest. ......................................... 134 Total proceeds from sale. ........................... $11,894 b. 2010 Dec.
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This note was uploaded on 03/26/2012 for the course ACCOUNTING 1A,1B,1C taught by Professor Spinozzi during the Summer '10 term at DeAnza College.

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Warren SM_Ch.15_final - CHAPTER 15 INVESTMENTS AND FAIR...

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