Question

Shamrock Company purchased, on January 1, 2017, as an available-for-sale security, $ 78,000 of the  11%,  5-year bonds...

Shamrock Company purchased, on January 1, 2017, as an available-for-sale security, $ 78,000 of the  11%,  5-year bonds of Chester Corporation for $ 72,513, which provides an  13% return.

Prepare Shamrock’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. (Assume a zero balance in the Fair Value Adjustment account.) The bonds have a year-end fair value of $ 74,100. (Round answers to 0 decimal places, e.g. 1,225. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1
Debit Credit
a Debt Investments (Available-for-Sale) 72513
          Cash 72513
b Cash 8580 =78000*11%
Debt Investments (Available-for-Sale) 847
        Interest Revenue 9427 =72513*13%
c Fair Value Adjustment (Available-for-Sale) 740 =74100-(72513+847)
        Unrealized Holding Gain or Loss—Equity 740
0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
At December 31, 2020, the available-for-sale debt portfolio for Shamrock, Inc. is as follows. Security Cost...
At December 31, 2020, the available-for-sale debt portfolio for Shamrock, Inc. is as follows. Security Cost Fair Value Unrealized Gain (Loss) A $22,750 $19,500 $(3,250 ) B 16,250 18,200 1,950 C 29,900 33,150 3,250 Total $68,900 $70,850 1,950 Previous fair value adjustment balance—Dr. 520 Fair value adjustment—Dr. $1,430 On January 20, 2021, Shamrock, Inc. sold security A for $19,630. The sale proceeds are net of brokerage fees. a.) Prepare the adjusting entry at December 31, 2020, to report the portfolio...
Pharaoh Company purchased on January 1,2017 as an available for sale security, $89,000 of the 8%,...
Pharaoh Company purchased on January 1,2017 as an available for sale security, $89,000 of the 8%, 5 year bonds of Chester Corporation which provides an 10% return. Prepare Pahroahs’s journal entries for (a) the purchase of the investment (b) receipt of annual interest and discount amortization, and (c) the year end fair value adjustment(Assumr a zero balance in the fair value adjustment account) the bonds have a year end fair value of $84,550
At December 31, 2017, the available-for-sale debt portfolio for Bridgeport, Inc. is as follows. Security Cost...
At December 31, 2017, the available-for-sale debt portfolio for Bridgeport, Inc. is as follows. Security Cost Fair Value Unrealized Gain (Loss) A $35,875 $30,750 $(5,125 ) B 25,625 28,700 3,075 C 47,150 52,275 5,125 Total $108,650 $111,725 3,075 Previous fair value adjustment balance—Dr. 820 Fair value adjustment—Dr. $2,255 On January 20, 2018, Bridgeport, Inc. sold security A for $30,955. The sale proceeds are net of brokerage fees. Part 1 Prepare the adjusting entry at December 31, 2017, to report the...
1. Presented below are two independent cases related to available-for-sale debt investments. Case 1 Case 2...
1. Presented below are two independent cases related to available-for-sale debt investments. Case 1 Case 2 Amortized cost $41,640 $91,800 Fair value 32,220 102,220 Expected credit losses 27,360 83,660 For each case, determine the amount of impairment loss, if any. (If no loss, please enter 0. Do not leave any fields blank.) Case 1 Impairment Loss $ Case 2 Impairment Loss $ 2. Sage Company purchased, on January 1, 2017, as a held-to-maturity investment, $66,000 of the 8%, 5-year bonds...
Shamrock Company leases an automobile with a fair value of $13,171 from John Simon Motors, Inc.,...
Shamrock Company leases an automobile with a fair value of $13,171 from John Simon Motors, Inc., on the following terms: 1. Non-cancelable term of 50 months. 2. Rental of $260 per month (at the beginning of each month). (The present value at 0.5% per month is $11,535.) 3. Shamrock guarantees a residual value of $1,770 (the present value at 0.5% per month is $1,379). Delaney expects the probable residual value to be $1,770 at the end of the lease term....
Exercise 11-16 Presented below is information related to equipment owned by Shamrock Company at December 31,...
Exercise 11-16 Presented below is information related to equipment owned by Shamrock Company at December 31, 2017. Cost $10,260,000 Accumulated depreciation to date 1,140,000 Expected future net cash flows 7,980,000 Fair value 5,472,000 Assume that Shamrock will continue to use this asset in the future. As of December 31, 2017, the equipment has a remaining useful life of 5 years. A. Prepare the journal entry (if any) to record the impairment of the asset at December 31, 2017. (If no...
On January 1, 2020, Sweet Company sold 11% bonds having a maturity value of $900,000 for...
On January 1, 2020, Sweet Company sold 11% bonds having a maturity value of $900,000 for $934,116, which provides the bondholders with a 10% yield. The bonds are dated January 1, 2020, and mature January 1, 2025, with interest payable December 31 of each year. Sweet Company allocates interest and unamortized discount or premium on the effective-interest basis. Prepare the journal entry at the date of the bond issuance. (Round answer to 0 decimal places, e.g. 38,548. If no entry...
On January 1, 2017, Flounder Company purchased 12% bonds having a maturity value of $390,000, for...
On January 1, 2017, Flounder Company purchased 12% bonds having a maturity value of $390,000, for $419,567.77. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2017, and mature January 1, 2022, with interest receivable January 1 of each year. Flounder Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category. Prepare the journal entry at the date of the bond purchase. (Enter answers to 2...
Shamrock Inc. owns shares of Bridgeport Corporation stock. At December 31, 2017, the securities were carried...
Shamrock Inc. owns shares of Bridgeport Corporation stock. At December 31, 2017, the securities were carried in Shamrock’s accounting records at their cost of $789,000, which equals their fair value. On September 21, 2018, when the fair value of the securities was $1,228,000, Shamrock declared a property dividend whereby the Bridgeport securities are to be distributed on October 23, 2018, to stockholders of record on October 8, 2018. Prepare all journal entries necessary on those three dates. (Credit account titles...
On January 1, 2017, Monty Company purchased 12% bonds, having a maturity value of $278,000, for...
On January 1, 2017, Monty Company purchased 12% bonds, having a maturity value of $278,000, for $299,076.51. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2017, and mature January 1, 2022, with interest received on January 1 of each year. Monty Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified as available-for-sale category. The fair value of the bonds at December 31 of each year-end is as follows....
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT