The information below relates to Wynn Corporation's investments classified as trading securities in 2017:
1/1/17 Purchased $100,000 par value of Barr Company bonds at 98 with an annual yield of 10%. The bonds pay interest annually on 12/31. The annual interest rate is 9%.
9/5/17 Purchased 3,200 shares of Pine, Inc. common stock for $30 per share.
12/31/17 Received $9,000 interest for investments in Barr Company bonds for 2017 (note: the discount of the bond investments should be amortized using the effective interest method when recording the receipt of $9,000 interest).
12/31/17 The market prices of the investments at 12/31/2017 were: Pine Inc. common stock $25 per share and Barr company bonds, 99. The fair value adjustment account balance was a credit of $300 prior to the fair value adjustment on 12/31/2017.
7/2/18 Wynn sold half of Pine, Inc. common stock for $50,000.
a. Prepare journal entries for the transactions occurred in 2017 (i.e., transactions on 1/1, 9/5 and 12/31) and make the appropriate entry to apply the fair market valuation for these investments on 12/31/2017.
b. Record the transaction of 7/2/2018
318,921 students got unstuck by Course
Hero in the last week
Our Expert Tutors provide step by step solutions to help you excel in your courses