During 2019, Francis Company decided to begin investing its idle cash in marketable securities. The information contained
Question:
During 2019, Francis Company decided to begin investing its idle cash in marketable securities. The information contained below relates to Francis’s 2019 marketable security transactions:
Apr. 1 Purchased $50,000 face value of Spencer Inc. 12% bonds at par plus accrued interest; interest on the bonds is payable each June 30 and December 31.
June 30 Received the semiannual interest on the Spencer bonds.
Nov. 1 Purchased $60,000 face value of Patterson Company 11% bonds at par plus accrued interest; interest on the bonds is payable each June 1 and December 1.
Dec. 1 Received the interest on the Patterson bonds and sold the bonds for $61,000.
31 Received the interest on the Spencer bonds. At year-end, the market price of the Spencer bonds was $50,500
Required:
1. Record Francis’s investment transactions for 2019.
2. Show the items of income or loss on the trading investments Francis reports on its 2019 income statement.
3. Show the carrying value of Francis’s investment account on its December 31, 2019, balance sheet.
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...
Step by Step Answer:
Intermediate Accounting Reporting and Analysis
ISBN: 978-1337788281
3rd edition
Authors: James M. Wahlen, Jefferson P. Jones, Donald Pagach