Allowance for Credit Loss

Cash

Credit Loss

Discount on Bond

Dividend receivable

Dividend revenue

Equity in earnings of XYZ

Fair Value Adjustment

Interest Revenue

Investment in Bond

Investment in XYZ common stock

Loss on Impairment (NI)

Premium on Bond

Realized Gain on Sale of Bond

Realized Gain on Sale of Stock

Realized Loss on Sale of Bond

Reclassification adjustment - OCI

Unrealized Holding Gain - NI

Unrealized Holding Gain - OCI

Unrealized Holding Loss - NI

Unrealized Holding Loss - OCI

Problem 4 [discount, temporary appreciation, AFS On June 30,2020 ABC purchased $500.000 par value bonds dated June 30, 2020 at a purchase price of 5462,806. The coupon rate on the bonds is 5% per year and the purchase price of the bonds yieldan effective rate of 6% per year. The bonds pay interest semiannuallyon June 30 and December 31" and mature on June 30, 2030. The fiscal year of ABC ends on December 31st. The fair market value of the bonds on December 31, 2020 was 470,000. ABC received the December 31 interest payment on December 31, 2020. ABC classifies the bonds as Available-For-Sale. A11 questions below pertain to the accounting for the investment by ABC. 1. Prepare all journal entries related to the bond investment that is necessary for ABC to issue GAAP compliant financial statements for the year ended December 31, 2020. Enter your answer below. Choose the account from the drop-down list in the yellow cell. En Entry to record purchase of bond on 6/30/2020: Account Debit Credit 1 1 1 Entries at 12/31/2020: Account Debit Credit NNNNN 2. What will be the post-adjustment December 31, 2020 amortized cost of the bond? Enter your answer in the green box 3 3. What will be the post-adjustment December 31, 2020 balance in the Fair Value Adjustment account? Enter your answer in the green box 4 4. What amount of interest revenue will be reported on the 2020 income statement? Enter your answer in the green box 5 5. At what amount will the investment in bonds be reported in the asset section of the December 31, 2020 balance sheet? Enter your answer in the green box 6 6. What amount of unrealized holding gain (f any) will be reported as a component of net income for the year ended December 31, 2020? 7 Enter your answer in the green box 7. What amount of unrealized holding gain (if any) will be reported as a component of other comprehensive income for the year ended December 31, 2020? 8 Enter your answer in the green box 8. Assume that ABC sold the bonds on January 2, 2021 for $471,000. Prepare all entries to record the sale Enter your answer below. Choose the account from the drop-down list in the yellow cell. Ent Entry to record sale of bond on 1/2/2021: Account Debit Credit 9 9 9 9 9 9 9 9 Problem 4 [discount, temporary appreciation, AFS On June 30,2020 ABC purchased $500.000 par value bonds dated June 30, 2020 at a purchase price of 5462,806. The coupon rate on the bonds is 5% per year and the purchase price of the bonds yieldan effective rate of 6% per year. The bonds pay interest semiannuallyon June 30 and December 31" and mature on June 30, 2030. The fiscal year of ABC ends on December 31st. The fair market value of the bonds on December 31, 2020 was 470,000. ABC received the December 31 interest payment on December 31, 2020. ABC classifies the bonds as Available-For-Sale. A11 questions below pertain to the accounting for the investment by ABC. 1. Prepare all journal entries related to the bond investment that is necessary for ABC to issue GAAP compliant financial statements for the year ended December 31, 2020. Enter your answer below. Choose the account from the drop-down list in the yellow cell. En Entry to record purchase of bond on 6/30/2020: Account Debit Credit 1 1 1 Entries at 12/31/2020: Account Debit Credit NNNNN 2. What will be the post-adjustment December 31, 2020 amortized cost of the bond? Enter your answer in the green box 3 3. What will be the post-adjustment December 31, 2020 balance in the Fair Value Adjustment account? Enter your answer in the green box 4 4. What amount of interest revenue will be reported on the 2020 income statement? Enter your answer in the green box 5 5. At what amount will the investment in bonds be reported in the asset section of the December 31, 2020 balance sheet? Enter your answer in the green box 6 6. What amount of unrealized holding gain (f any) will be reported as a component of net income for the year ended December 31, 2020? 7 Enter your answer in the green box 7. What amount of unrealized holding gain (if any) will be reported as a component of other comprehensive income for the year ended December 31, 2020? 8 Enter your answer in the green box 8. Assume that ABC sold the bonds on January 2, 2021 for $471,000. Prepare all entries to record the sale Enter your answer below. Choose the account from the drop-down list in the yellow cell. Ent Entry to record sale of bond on 1/2/2021: Account Debit Credit 9 9 9 9 9 9 9 9