Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN: 9781337788281
Author: James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher: Cengage Learning
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Textbook Question
Chapter 13, Problem 14P
Investments in Equity Securities Noonan Corporation prepares quarterly financial statements and invests its excess funds in marketable securities. At the end of 2018, Noonan’s portfolio of investments consisted of the following equity securities:
Dunne the first half of 2019, Noonan engaged in the following investment transactions:
Required:
- 1. Record Noonan’s investment transactions for January 6 through June 30, 2019.
- 2. Show the items of income or loss from investment transactions that Noonan reports for each of the first and second quarters of 2019.
- 3. Show how the preceding items are reported on the first and second quarter 2019 ending
balance sheets , assuming that management expects to dispose of the Keene and Sachs securities within the next year.
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Instructions
Chart of Accounts
On February 1, 2020, Aggie Corporation sold its investment in Smith Corporation bonds for $12,500. The bonds have a face
CHART OF ACCOUNTS
value of $12,000 and a stated interest rate of 10%. The market value of the bonds on December 31, 2019 was $12,300.
Aggie Corporation
Required:
General Ledger
Prepare the journal entries to record the sale of the bonds and the adjustments of the unrealized gain or loss.
ASSETS
REVENUE
111 Cash
411 Sales Revenue
113 Investment in Trading Securities
431 Interest Income
114 Investment in Available-for-Sale Securities
441 Gain on Sale of Available-for-Sale
General Journal
117 Interest Receivable
Securities
119 Allowance for Change in Fair Value of Investment
121 Accounts Receivable
EXPENSES
Prepare the journal entries to record the sale of the bonds and the adjustments of the unrealized gain or loss on February 1, 2020.
500 Cost of Goods Sold
141 Inventory
152 Prepaid Insurance
511 Insurance Expense
General Journal…
Accounting for debt investments
On February 1, 2018, Bell Co. decides to invest excess cash of $16,800 by purchasing a Grant, Inc. bond at face value. At year-end, December 31, 2018, the fair value of the Grant bond was $19,600. The investment is categorized as a trading debt investment.
Requirements
Journalize the transactions for Bell’s investment in Grant, Inc. for 2018.
In what category and at what value would Bell report the asset on the December 31, 2018, balance sheet? In what account would the market price change in Grant’s bond be reported, if at all?
What was the net effect of the investment on Bell’s net income for the year ended December 31, 2018?
In 2021 and 2022, Norman Company had the following transactions related to investments in bonds.2021
Apr. 1 Purchased $400,000 of 8% bonds issued by JS, Inc. at face value. Interest is payable semiannually on September 30 and March 31.
June 1Purchased $500,000 of 12% bonds issued by Okla Co. at face value. Interest is payable semiannually on November 30 and May 31.
Sept. 30 Received semiannual interest payment from JS, Inc.
Nov. 30 Received semiannual interest payment from Okla Co.Dec. 31
Recorded any necessary adjusting entries relating to the investments.
Chapter 13 Solutions
Intermediate Accounting: Reporting And Analysis
Ch. 13 - Prob. 1GICh. 13 - Provide brief definitions for the following terms:...Ch. 13 - What are the three categories of investments in...Ch. 13 - Prob. 4GICh. 13 - Prob. 5GICh. 13 - Identify the accounting methods a company uses for...Ch. 13 - Briefly summarize the accounting for an investment...Ch. 13 - Prob. 8GICh. 13 - Prob. 9GICh. 13 - Prob. 10GI
Ch. 13 - Prob. 11GICh. 13 - Prob. 12GICh. 13 - Prob. 13GICh. 13 - Prob. 14GICh. 13 - Prob. 15GICh. 13 - Briefly describe how to determine and record the...Ch. 13 - Prob. 17GICh. 13 - Prob. 18GICh. 13 - Prob. 19GICh. 13 - Briefly describe how to determine and record any...Ch. 13 - Prob. 21GICh. 13 - Prob. 22GICh. 13 - Prob. 23GICh. 13 - Prob. 24GICh. 13 - How does IFRS categorize minority passive...Ch. 13 - Prob. 26GICh. 13 - Prob. 27GICh. 13 - Prob. 28GICh. 13 - Prob. 29GICh. 13 - Prob. 30GICh. 13 - Prob. 31GICh. 13 - What is a fund? Distinguish between a fund and an...Ch. 13 - Prob. 33GICh. 13 - Prob. 34GICh. 13 - Prob. 1MCCh. 13 - During 2021, Anthony Company purchased debt...Ch. 13 - On July 1, 2019, Aldrich Company purchased as an...Ch. 13 - In 2021, Cromwell Corporation purchased bonds of...Ch. 13 - Prob. 5MCCh. 13 - A security in a portfolio of available-for-sale...Ch. 13 - On its December 31, 2018, balance sheet, Fay...Ch. 13 - Prob. 8MCCh. 13 - Cash dividends declared out of current earnings...Ch. 13 - On January 1, 2019, Park Company accepted a...Ch. 13 - Prob. 1RECh. 13 - Prob. 2RECh. 13 - Prob. 3RECh. 13 - Refer to the information in RE 13-3. Assume that...Ch. 13 - Prob. 5RECh. 13 - Refer to the information in RE13-5. Assume that on...Ch. 13 - Refer to the information in RE13-5. Assume that on...Ch. 13 - Prob. 8RECh. 13 - On February 1, 2019, Razorback Corporation decides...Ch. 13 - On September 30, Franz Corporation notices a...Ch. 13 - Prob. 11RECh. 13 - Refer to the information in RE13-11. Assume that...Ch. 13 - Prob. 13RECh. 13 - Prob. 14RECh. 13 - On January 1, Kilgore Inc. accepts a 20,000...Ch. 13 - Prob. 16RECh. 13 - Prob. 1ECh. 13 - Held-to-Maturity Securities and Amortization of a...Ch. 13 - Prob. 3ECh. 13 - Prob. 4ECh. 13 - Investment Discount Amortization Schedule On...Ch. 13 - Investment Premium Amortization Schedule On...Ch. 13 - Prob. 7ECh. 13 - Trading Securities At the beginning of 2019, Able...Ch. 13 - Prob. 9ECh. 13 - Prob. 10ECh. 13 - Available-for-Sale Securities On December 31,...Ch. 13 - Available-for-Sale Securities At the beginning of...Ch. 13 - Available-for-Sale Securities At the end of 2018,...Ch. 13 - Transfer between Categories On December 31, 2018,...Ch. 13 - Impairment On June 1, 2019, Hansen Company...Ch. 13 - Equity Securities Midwest Bank invests in equity...Ch. 13 - Equity Securities Southeast Bank invests in equity...Ch. 13 - Prob. 18ECh. 13 - Prob. 19ECh. 13 - Prob. 20ECh. 13 - Notes Receivable On January 1, 2019, Crouser...Ch. 13 - Notes Receivable On January 1, 2019, Worthylake...Ch. 13 - Note Receivable in Installments On January 1,...Ch. 13 - Notes Receivable and Income On January 1, 2019,...Ch. 13 - Prob. 25ECh. 13 - Sinking Funds Entries The following information is...Ch. 13 - (Appendix 13.1) Derivatives Anglar Company has a 3...Ch. 13 - Prob. 1PCh. 13 - Prob. 2PCh. 13 - Prob. 3PCh. 13 - Bond Investment Premium Amortization Schedule...Ch. 13 - Prob. 5PCh. 13 - Trading Securities Akers Company invests its...Ch. 13 - Investment in Trading Securities The following...Ch. 13 - Prob. 8PCh. 13 - Available-for-Sale Securities Holly Company...Ch. 13 - Investment in Available-for-Sale Bonds The...Ch. 13 - Investments in Available-for-Sale Bonds During...Ch. 13 - Equity Securities The investment manager of 4th...Ch. 13 - Equity Securities 8th State Bank prepares interim...Ch. 13 - Investments in Equity Securities Noonan...Ch. 13 - Investments in Equity Securities Manson...Ch. 13 - Prob. 16PCh. 13 - Prob. 17PCh. 13 - Prob. 18PCh. 13 - Prob. 19PCh. 13 - Equity Method and Subsequent Sale On January 1,...Ch. 13 - Prob. 21PCh. 13 - Notes Receivable On January 1, 2019, Somerville...Ch. 13 - Notes Receivable On January 1, 2019, Lisa Company...Ch. 13 - Comprehensive Notes Receivable On January 1, 2019,...Ch. 13 - Prob. 25PCh. 13 - (Appendix 13.1) Derivatives Danburg. Company has a...Ch. 13 - Realized and Unrealized Losses An important part...Ch. 13 - Investments in Securities Cane Company has two...Ch. 13 - Prob. 3CCh. 13 - Victoria Company has investments in marketable...Ch. 13 - Available-for-Sale Securities The following are...Ch. 13 - Prob. 6CCh. 13 - You are an accountant for Davanzo Company. The...Ch. 13 - Prob. 8C
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