Question

Rantzow-Lear Company buys and sells debt securities expecting to earn profits on short-term differences in price, and holds these investments in its trading portfolio. The company’s fiscal year ends on December 31. The following selected transactions relating to Rantzow-Lear’s trading account occurred during December 2021 and the first week of 2022.

2021
Dec.		17		Purchased 180 Grocers’ Supply Corporation bonds at par for $450,000.
		28		Received interest of $5,200 from the Grocers’ Supply Corporation bonds.
		31		Recorded any necessary adjusting entry relating to the Grocers’ Supply Corporation bonds. The market price of the bond was $3,000 per bond.
2022
Jan.		5		Sold the Grocers' Supply Corporation bonds for $513,000.

Required:
1. Prepare the appropriate journal entry or entries for each transaction.
2. Indicate any amounts that Rantzow-Lear Company would report in its 2021 balance sheet and income statement as a result of this investment.

1. The list of each transaction:

(a) December 17, 2021 - Purchased 180 Grocers' Supply Corporation bonds at par for $450,000.

(b) December 28, 2021 - Received interest of $5,200 from the Grocers' Supply Corporation bonds.

(c) December 31, 2021 - Record any necessary adjusting entry relating to the Grocers' Supply Corporation bonds on December 31. The market price of the bonds was $3,000 per bond

(d) January 5, 2022 - Record the entry to adjust fair value of the investment on date of sale.

(e) January 5, 2022 - Sold the Grocers' Supply Corporation bonds for $513,000.

2.

Balance Sheet
December 31, 2021
Current Assets:
Income Statement:

Answer 1