1. Problem 9-9 The following information relates to the debt securities investments of Riverbed Company: On February 1, the company purchases 10% bonds of Gibbons Co. having a par value of $318,000 at 100 plus accrued interest. Interest is payable April 1 and October 1. 2. On April 1, semi-annual interest is received. 3. On July 1, 9% bonds of Sampson Inc. are purchased. These bonds with a par value of $212,000 are purchased at 100 plus accrued interest. Interest dates are June 1 and December 1. 4. On October 1, semi-annual interest is received. 5. On December 1, semi-annual interest is received. On December 31, the fair values of the bonds purchased on February 1 and July 1 are 95 and 93, respectively. 6. Prepare any journal entries you consider necessary, including year-end entries (December 31), assuming these are FV-OCI securities. (Hint: Do no use interest receivable except for the year end accrual.) (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit Feb. 1 FV-OCI Investments 318,000 Interest Income 10600 Cash 328600 Apr. 1 Cash 5300 Interest Income 5300 July 1 FV-OCI Investments 212,000 Interest Income 159 Cash 212159 Oct. 1 Cash Interest Income Dec. 1 Cash Interest Income Dec. 31 Unrealized Gain or Loss - FV-OCI Investments (To accrue interest) Dec. 31 Interest Receivable Interest Income (To record fair value adjustment) CUM TOT LocalTC If Riverbed Company classified these as cost/amortized cost, explain how the journal entries would differ from those in part (a). (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit Feb. 1 July 1 (To record accrued interest)
