Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Chart of Accounts 211 Accuunis rayauie 231 Salaries Payable 250 Unearned Revenue 261 Income Taxes Payable Joy miscealiarieus experises 895 Loss on Sale of Trading

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
Chart of Accounts 211 Accuunis rayauie 231 Salaries Payable 250 Unearned Revenue 261 Income Taxes Payable Joy miscealiarieus experises 895 Loss on Sale of Trading Securities 910 Income Tax Expense EQUITY 311 Common Stock 331 Retained Earnings 390 Unrealized Holding Gain/Loss: Trading Securities 391 Unrealized Holding Gain/Loss: Available-for-Sale Securities Chart of Accounts me 152 Prepaid Insurance 181 Equipment 189 Accumulated Depreciation 191 Investment in Held-to-Maturity Debt Securities LIABILITIES 211 Accounts Payable 231 Salaries Payable 250 Unearned Revenue 261 Income Taxes Payable 511 Insurance Expense 512 Utilities Expense 521 Salaries Expense 532 Bad Debt Expense 540 Interest Expense 541 Depreciation Expense 559 Miscellaneous Expenses 895 Loss on Sale of Trading Securities 910 Income Tax Expense On December 31,2019 . Sumner Company held Wall Company bonds in its portlolio of trading securities. The bonds have a par value of $40,000, carry a 10% annual interest rate, mature in 2026, and had originally been putchased at par. The market value of the bonds on December 31, 2019 was $38,000. On January 1, 2020, Sumner acquired bonds of Doherty Cormpany with a par value of $30,000 for $30,200. The Doherty Company bonds carry an annual interest rate of 1276 and mature on December 31, 2024. Addrionally, on the same date, Sumner acquired Maggio Company bends with a face value of $200,000 for $19,500. The Magpo Company bonds cary an 6% annual interest rate and miature on December 31, 2029. At the end of 2020, the respective market values of the bonds were: Wall, $39,000, Doherny, \$31,000; and Maggio, $21,000. Sumner classties all of the debt securities as trading. Assume that Sumner uses the straightine method to amorize any discounts or premiums. Required: 1. Prepare the joumal entries necessary to record the purchase of the investments on January 1,2020 , The annual inderest payments on December 3t, 2020, and the adpusting entry needed on Docember 31, 2020. 2. What would sumner disclose on its December 31 , zasa, balance sheet relaled to these imvestments? Chart of Accounts Sumner Company General Ledger ASSETS 111 Cash 113 Investment in Trading Securities 114 Investment in Available-for-Sale Securities 119 Allowance for Change in Fair Value of Investment 121 Accounts Recelvable 141 Inventory 152 Prepaid Insurance 181 Eouinment REVENUE 411 Sales Revenue 431 Interest Income 441 Gain on Sale of Trading Securities EXPENSES 500 Cost of Goods Sold 511 Insurance Expense 512 Uthilies Expense

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting Accounting Made Simple For Beginners

Authors: Robert Briggs

1st Edition

1761032739, 978-1761032738

More Books

Students also viewed these Accounting questions

Question

What is the purpose of the EEOC?

Answered: 1 week ago