RECORDING INVESTMENTS IN SHORT-TERM DEBT SECURITIES. On Septem- ber 1, 19x2, Chambers Corporation purchased a marketable debt
Question:
RECORDING INVESTMENTS IN SHORT-TERM DEBT SECURITIES. On Septem- ber 1, 19x2, Chambers Corporation purchased a marketable debt security for $10,000 as a short-term investment of temporarily idle cash. The security earns interest at a rate of 7.5% per year and will pay all interest and principal on its maturity date, August 31, 19x3. On December 31, 19x2, the end of Chambers’ accounting period, the security has a market value of $9,425. This security is held to maturity and is Chambers’ only short-term investment.
REQUIRED:
1. Prepare Chambers’ journal entries related to the security on September 1, 19x2, December 31, 19x2, and August 31, 19x3, respectively.
2. How would the security be presented in the financial statements issued for 19x2?
Step by Step Answer: