Answered step by step
Verified Expert Solution
Link Copied!

Question

00
1 Approved Answer

Colah Company purchased $1,800,000 of Jackson, Inc., 8% bonds at par on July 1, 2021, with interest paid semi-annually. Colah determined that it should account

image text in transcribed
image text in transcribed
image text in transcribed
Colah Company purchased $1,800,000 of Jackson, Inc., 8% bonds at par on July 1, 2021, with interest paid semi-annually. Colah determined that it should account for the bonds as an available-for-sale investment. At December 31, 2021, the Jackson bonds had a fair value of $2,080,000. Colah sold the Jackson bonds on July 1, 2022 for $1,620,000. Required: 1. Prepare Colah's journal entries for the following transactions: a. The purchase of the Jackson bonds on July 1. b. Interest revenue for the last half of 2021. c. Any year-end 2021 adjusting entries. d. Interest revenue for the first half of 2022. e. Any entries necessary upon sale of the Jackson bonds on July 1, 2022, including updating the fair-value adjustment, recording any reclassification adjustment, and recording the sale. 2. Complete the following table to show the effect of the Jackson bonds on Colah's net income, other comprehensive income, and comprehensive Income for 2021, 2022, and cumulatively over 2021 and 2022. Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare Colah's journal entries for above transactions. If no entry is required for a transaction/event, select "No journal entry ner in whole dollars, not in millions.) No General Journal Date July 01, 2021 Credit 1 Investment in bonds Cash Debit 1,800,000 1,800,000 2 December 31, 202 Cash Interest revenue 72,000 72,000 02 December 31, 202 Fair value adjustment Gain on investment (unrealized, OCI) 280,000 O 280,000 4 June 30, 2022 72,000 Cash Interest revenue 72,000 5 3 July 01, 2022 380,000 Loss on investment (unrealized, OCI) Fair value adjustment 380,000 6 July 01, 2022 Fair value adjustment Reclassification adjustment (OCI) 7 July 01, 2022 1,620,000 180,000 Cash Loss on investment (NI) Investment in bonds SIS 1,800,000 Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Fill out the following table to show the effect of the Jackson bonds on Colah's net income, other comprehensive Income, and comprehensive income for 2021, 2022, and cumulatively over 2021 and 2022. (Negative amounts should be entered with minus sign. Enter your answer in whole dollars, not in millions.) 2021 72,000 280,000 S Total 180,000 0 2022 IS 108,000 $ $ (280,000) $ $ (388,000) $ Net Income OCI Comprehensive Income $ (36.000) $ 352,000

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered 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

Introduction to Managerial Accounting

Authors: Peter C. Brewer, Ray H. Garrison, Eric Noreen, Suresh Kalagnanam, Ganesh Vaidyanathan

5th Canadian edition

77429494, 1259105709, 1260480798, 978-1259105708

Students also viewed these Accounting questions