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At the end of 2018, Hodge Company prepared the following schedule of investments in trading debt securities (all of which were acquired at par value):
At the end of 2018, Hodge Company prepared the following schedule of investments in trading debt securities (all of which were acquired at par value):
Company | 12/31/2018 Book Value | 12/31/2018 Fair Value |
Thompson Company | $75,000 | $74,200 |
Stevens Company | 40,000 | 43,100 |
Totals | $115,000 | $117,300 |
During 2019, the following transactions occurred:
July 1 | Purchased Little Company debt securities for $100,000 (which is equal to par value). The securities carry an annual interest rate of 10%, mature on December 31, 2021, and pay interest seminannually on July 1 and December 31. |
Oct. 11 | Sold all of the Thompson Company securities for $73,000 plus interest of $2,800. |
Dec. 31 | Received interest of $5,000 on the Stevens Company and Little Company debt securities, and the following yearend total market values were available: Stevens Company debt securities, $45,000; Little Company debt securities, $98,000. |
Required:
1. | Prepare journal entries to record the preceding information. |
PAGE 1 GENERAL JOURNAL Score: 121/125 POST. REF. CREDIT DATE ACCOUNT TITLE Jul. 1 Investment in Trading Securities DEBIT 100,000.00 1 2 N Cash 100,000.00 3 Oct. 11Cash 75,800.00 4 1,200.00 Loss on Sale of Trading Securities Investment in Trading Securities 5 74,200.00 6 Interest Income 2,800.00 7 Dec. 31 Cash 5,000.00 8 Interest Income 5,000.00 9 9 6,100.00 Dec. 31 Unrealized Holding Gain/Loss: Trading Securities Investment in Trading Securities 10 6,100.00
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