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    Latihan 2 Short-Term Investments

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    shanida
    Waldo Corporation had various transactions involving debt investments in Hillary Co. bonds throughout 2017 and 2018. It purchased bonds, accrued and received interest, sold some bonds, and accrued more interest. Journal entries are needed to record these transactions. Rho Jean Inc. acquired shares of Stillwater Corp. and recorded entries for dividends and equity in earnings. Debbie Inc. also acquired shares of North Sails and recorded entries for dividends and equity in earnings. Powderhorn Corporation has trading securities and available-for-sale securities. Journal entries are required at year-end 2017 to record the fair value adjustments for each category based on the cost, fair value, and prior year balances provided.

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    Latihan 2 Short-Term Investments

    Uploaded by

    shanida
    53 views13 pages
    Waldo Corporation had various transactions involving debt investments in Hillary Co. bonds throughout 2017 and 2018. It purchased bonds, accrued and received interest, sold some bonds, and accrued more interest. Journal entries are needed to record these transactions. Rho Jean Inc. acquired shares of Stillwater Corp. and recorded entries for dividends and equity in earnings. Debbie Inc. also acquired shares of North Sails and recorded entries for dividends and equity in earnings. Powderhorn Corporation has trading securities and available-for-sale securities. Journal entries are required at year-end 2017 to record the fair value adjustments for each category based on the cost, fair value, and prior year balances provided.

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    Latihan 2 Short-term Investments

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    Waldo Corporation had various transactions involving debt investments in Hillary Co. bonds throughout 2017 and 2018. It purchased bonds, accrued and received interest, sold some bonds, and accrued more interest. Journal entries are needed to record these transactions. Rho Jean Inc. acquired shares of Stillwater Corp. and recorded entries for dividends and equity in earnings. Debbie Inc. also acquired shares of North Sails and recorded entries for dividends and equity in earnings. Powderhorn Corporation has trading securities and available-for-sale securities. Journal entries are required at year-end 2017 to record the fair value adjustments for each category based on the cost, fair value, and prior year balances provided.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    53 views13 pages

    Latihan 2 Short-Term Investments

    Uploaded by

    shanida
    Waldo Corporation had various transactions involving debt investments in Hillary Co. bonds throughout 2017 and 2018. It purchased bonds, accrued and received interest, sold some bonds, and accrued more interest. Journal entries are needed to record these transactions. Rho Jean Inc. acquired shares of Stillwater Corp. and recorded entries for dividends and equity in earnings. Debbie Inc. also acquired shares of North Sails and recorded entries for dividends and equity in earnings. Powderhorn Corporation has trading securities and available-for-sale securities. Journal entries are required at year-end 2017 to record the fair value adjustments for each category based on the cost, fair value, and prior year balances provided.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    1.

    Waldo Corporation had the following transactions pertaining to debt investments.

    Jan. 1, 2017 Purchased 30, $1,000 Hillary Co. 10% bonds for $30,000. Interest is payable annually
    on January 1.
    Dec. 31, 2017 Accrued interest on Hillary Co. bonds in 2017.
    Jan. 1, 2018 Received interest on Hillary Co. bonds.
    Jan. 1, 2018 Sold 15 Hillary Co. bonds for $14,600.
    Dec. 31, 2018 Accrued interest on Hillary Co. bonds in 2018.

    Journalize the transactions.

    2. Presented below are two independent situations.

    1) Rho Jean Inc. acquired 5% of the 400,000 shares of common stock of Stillwater Corp. at a total cost of $6 per share
    on May 18, 2017. On August 30, Stillwater declared and paid a $75,000 dividend. On December 31, Stillwater
    reported net income of $244,000 for the year.
    2) Debbie, Inc. obtained significant influence over North Sails by buying 40% of North Sails’ 60,000 outstanding
    shares of common stock at a cost of $12 per share on Janu- ary 1, 2017. On April 15, North Sails declared and paid
    a cash dividend of $45,000. On December 31, North Sails reported net income of $120,000 for the year.

    Prepare all necessary journal entries for 2017 for (1) Rho Jean Inc. and (2) Debbie, Inc.

    3. Some of Powderhorn Corporation’s investment securities are classified as trading securi- ties and some are classified as
    available-for-sale. The cost and fair value of each category at December 31, 2017, are shown below.

    Cost Fair Value Unrealized Gain (Loss)


    Trading securities $93,600 $94,900 $1,300
    Available-for-sale securities $48,800 $51,400 $2,600

    At December 31, 2016, the Fair Value Adjustment—Trading account had a debit balance of $9,200, and the Fair Value
    Adjustment—Available-for-Sale account had a credit bal- ance of $5,750. Prepare the required journal entries for each group of
    securities for December 31, 2017.

    4. Identify where each of the following items would be reported in the financial statements.

    1) Interest earned on investments in bonds.


    2) Fair value adjustment—available-for-sale.
    3) Unrealized loss on available-for-sale securities.
    4) Gain on sale of investments in stock.
    5) Unrealized gain on trading securities.

    Use the following possible categories:

    Balance sheet:
    Current assets Current Liabilities
    Investments Long-term liabilities
    Property, plant, and equipment Stockholders’ equity
    Intangible assets
    Income statement:
    Other revenues and gains Other expenses and loses

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