chap 17 - BE17-1 Your answer is correct Garfield Company purchased as a held-to-maturity investment $80,000 of the 9 5-year bonds of Chester Corporation

chap 17 - BE17-1 Your answer is correct Garfield Company...

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BE17-1 Your answer is correct. Garfield Company purchased, as a held-to-maturity investment, $80,000 of the 9%, 5-year bonds of Chester Corporation for $74,086, which provides an 11% return. Prepare Garfield's journal entries for (a) the purchase of the investment and (b) the receipt of annual interest and discount amortization. Assume effective interest amortization is used. (Round answers to zero decimal places, e.g. 25,000. List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.) Description/Account Debit Credit (a) Held-to-Maturity Securities 74086 Cash 74086 (b) Cash 7200 Held-to-Maturity Securities 949 Interest Revenue 8149 BE17-2 Your answer is correct. Garfield Company purchased, as an available-for-sale securities, $80,000 of the 9%, 5-year bonds of Chester Corporation for $74,086, which provides an 11% return. Prepare Garfield's journal entries for (a) the purchase of the investment, (b) the receipt of annual interest and discount amortization, and (c) the year-end fair value adjustment. The bonds have a year-end fair value of $75,500. Assume effective interest amortization is used. (Round answers to zero decimal places, e.g. 12,510. List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.) Description/Account Debit Credit (a) Debt Investments (AFS) 74086 Cash 74086 (b) Cash 7200 Debt Investments (AFS) 949 Interest Revenue 8149 (c) Securities Fair Value Adjustment(AFS) 465 Unrealized Holding Gain or Loss-Equity 465 BE17-3 Your answer is correct. Carow Corporation purchased, as a held-to-maturity investment, $60,000 of the 8%, 5-year bonds of Harrison, Inc. for $65,118, which provides a 6% return. The bonds pay interest semiannually. Prepare Carows' journal entries for (a) the purchase of the investment, and (b) the receipt of semiannual interest and premium amortization. Assume effective interest amortization is used. (Round answers to zero decimal places, e.g. 25,510. List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.) Description/Account Debit Credit (a) Debt Investments (HTM) 65118 Cash 65118
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(b) Cash 2400 Interest Revenue 1954 Debt Investments (HTM) 446 BE17-4 Your answer is correct. Hendricks Corporation purchased trading investment bonds for $50,000 at par. At December 31, Hendricks received annual interest of $2,000, and the fair value of the bonds was $47,400. Prepare Hendricks' journal entries for (a) the purchase of the investment, (b) the interest received, and (c) the fair value adjustment. Description/Account (a) Debt Investments (Trading) Cash (b) Cash Interest Revenue (c) Unrealized Holding Gain or Loss-Income Fair Value Adjustment (Trading) BE17-5 Your answer is correct. Fairbanks Corporation purchased 400 shares of Sherman Inc. common stock as an available-for- sale investment for $13,200. During the year, Sherman paid a cash dividend of $3.25 per share. At year-end, Sherman stock was selling for $34.50 per share. Prepare Fairbanks's journal entries to record (a) the purchase of the investment, (b) the dividends received, and (c) the fair value adjustment.
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  • Spring '13
  • keller
  • Generally Accepted Accounting Principles, Debt Investments, AFS

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